💸 Russian Billionaire Roman Abramovich Revealed as Key Investor in Curaleaf
💸 Russian Billionaire Roman Abramovich Revealed as Key Investor in Curaleaf
Trulieve shores up B/S with debt financings: $19M/7.3%, $71.5M/7.3%. JW Asset Management pushes for management & board changes at RIV Capital. Detroit awards first 33 adult-use dipsensary licenses.
🌿 Industry
Roman Abramovich Secretly Funded Curaleaf. An offshore company controlled by Russian billionaire Roman Abramovich invested hundreds of millions of dollars into the U.S. marijuana industry and secretly funded top shareholders of the world’s largest cannabis company, leaked documents show. Abramovich, whose net worth is estimated at $9 billion, was sanctioned by the U.K. and the EU after Russia’s invasion of Ukraine. He has not been sanctioned by the U.S., but the Department of Justice obtained a warrant to seize two of his planes in June. Now, newly leaked documents from Cyprus show that Abramovich’s company invested in a plethora of companies in the American cannabis industry, and also helped fund the two biggest shareholders of Curaleaf. Abramovich was forced to sell Chelsea FC back in March, with the sale completed in May. — link
A national weed glut is causing prices to plummet and imperiling businesses. Michigan has way too much weed. The number of cannabis grow operations serving the state’s recreational market has almost doubled in the past year. The number of active marijuana plants now exceeds 1.2 million, roughly six times the volume seen in 2020. By one estimate, Michigan has enough cultivation capacity to supply three times as much weed as the state’s consumers are buying — and that doesn’t include the huge illegal market that by all accounts commands a large share of sales. Michigan is emblematic of what’s been happening across the country all year — and why the industry’s been in a funk even as legalization spreads. Over the last two years, the price of Cannabis in the Michigan recreational market has plummeted about 75 percent — from nearly $400 an ounce to less than $100. — link
Florida gets ready to issue 22 more medical marijuana licenses. Currently 22 companies in Florida are licensed to operate medical marijuana dispensaries. With its population of more than 22 million people, Florida is one of the biggest states in the country for medical marijuana. The state must grant new licenses as the number of medical marijuana patients increases. The state also will increase the license renewal fee for medical marijuana companies. — link
Detroit awards first 33 adult-use dipsensary licenses under revised ordinance. The City of Detroit notified the first 33 successful applicants for adult-use marijuana retail licenses that they have been approved. The announcement is a milestone in the city’s journey toward establishing an adult-use marijuana industry since Michigan voters approved it four years ago. Following an exhaustive independent review and scoring process over the past two months, the City’s Office of Marijuana Ventures & Entrepreneurship determined the following 13 non-equity applicants, and 20 equity applicants met all the necessary criteria to be awarded a license. Under the ordinance, the City had the ability to approve up to 20 general applications and 20 social equity applications for retail licenses in Round One. In the social equity category, the 20 applicants with the highest total scores were approved for licenses. — link
New Jersey announces $10M ‘cannabis equity’ grant for startup companies. Startups can procure some capital after New Jersey announced a $10M program called the Cannabis Equity Grant. The New Jersey Economic Development Authority says awardees can use the money for early-stage expenses and technical training. Out of the $10M allotted to the program, $6M will go to social equity applicants. Social equity applicants can receive up to $250,000 that goes toward expenses like regulatory fees, rental expenses, utilities, and wages. The program is open to companies formed after March 2020 with less than 50 employees that already hold a conditional cannabis license. — link
Vermont Cannabis sales totaled $2.6M During First Month. Vermont cannabis stores sold $2.6 million worth of product during October, the first month they were in business, according to the state Department of Taxes. Fewer stores were open in October than today, and some shops initially had a more limited supply to offer customers. But the figures did not surprise state officials. — link
💵 Deals
Trulieve Closes $71.5M Debt Financing at 7.5% and $18.9M Debt Financing at 7.3%. The $71.5M commercial loan is secured by a cultivation and manufacturing site in Florida. Trulieve will pay interest at a fixed rate of 7.53% for the duration of the five-year loan. Lenders were comprised of three banks, with Valley National Bank serving as lead agent. The Company intends to use the net loan proceeds for general corporate purposes. The $18.9M commercial loan at 7.3% is secured by a cultivation and manufacturing facility located in West Virginia. — link
TerrAscend amends $115M Pennsylvania Senior Secured Term Loan. The Amendment will reduce Company debt by $35M and annual interest expense by $5M. Combined with recently announced debt retirement of $125M, Company debt will be reduced by a cumulative $160M and will result in total annual interest savings of $15M. TerrAscend will make the $35M payment on March 15, 2023 at the original prepayment price of 103.22% to par. The Loan matures in December 2024 and originally could not be prepaid without penalty until June 2023. The Amendment now affords the Company flexibility to enter into a sale leaseback transaction or mortgage, at its discretion, on its cultivation facility in Pennsylvania, which has an estimated value of $50M. — link
Body and Mind Closes Strategic Capital Raise and Enters New Jersey Market. The Company has closed a convertible debenture financing for gross proceeds of $3.0M (8.0% interest per annum, convertible at $0.10/share, 15M warrants at $0.10/share) from Bengal Capital, with additional participation from Mindset Capital. Simultaneously, the Company is acquiring CraftedPlants NJ, an entity that leases a New Jersey retail location with local cannabis-use approval and is currently working on attaining final state licensure in New Jersey. — link
Red White & Bloom eliminates $10.5M of debt. The board has approved the settlement of $10.5M in debt related to arm’s length financing through the issuance of 22,440,467 common shares at a price of $0.47 per share, representing a premium of 370% to the company’s closing price per share on December 20, 2022. — link
MediPharm Labs to acquire VIVO Cannabis. The acquisition of VIVO will add established Australian and German medical cannabis brand Beacon Medical, an industry-leading medical cannabis clinic business Harvest Medicine, and a longstanding Canadian medical sales platform Canna Farms Medical. The pro-forma Combined Company would have annualized international revenue of over $20M, based on Q3 2022. Pro forma EBITDA is expected to be between $7M to $9M on an annualized basis, and could reach positive EBITDA and cash flow in 1H 2024. Anticipated combined cash position of ~$30M, less than $2.5M in debt on closing, and unencumbered ownership of all major assets. — link
Flora Growth closes Acquisition of Franchise Global Health, Cementing Foothold in Germany and the European Union. FGH’s German businesses operate primarily in the pharmaceutical, medical device and medicinal cannabis import and distribution markets, servicing more than 1,200 pharmacies in Germany and providing non-cannabis medical products to 28 additional countries. Franchise Global Health (TSXV: FGH) revenues and gross profit for the nine-month period ended September 30, 2022 were $32.7M and $2.5M, respectively. — link
📄 Company Updates
RIV Capital's largest shareholder (19.8% ownership), JW Asset Management, requisitions special meeting to address necessary leadership changes. An immediate overhaul of the Board with independent and experienced directors is necessary to prevent further value destruction and to construct an effective strategy for growth moving forward. JWAM is seeking the removal of Joseph Mimran, Laura Curran, Christopher Hagedorn, Richard Mavrinac, and Mark Sims from the Board. JWAM also claims that current leadership team recklessly pursued and closed on overpriced and risky acquisition (Etain) without shareholder vote or fairness opinion. And transactions with related parties and lack of independent oversight need to be addressed for RIV Capital to be successful over time.
Trulieve Settles with OSHA. Trulieve has entered into a voluntary agreement with the Department of Labor's Occupational Safety and Health Administration (OSHA) that will result in additional health and safety protections for Trulieve workers at its cannabis manufacturing facilities. Under the agreement, Trulieve will undertake a study to determine whether ground cannabis dust is required to be classified as a "hazardous chemical" in the occupational setting, according to OSHA regulations. Work on the study is to be complete by May 29, 2023. While not mentioned, this is tied to an OSHA inspection from an employee death at its cultivation facility in Holyoke, MA after inhaling “ground cannabis dust.”
Dutchie awarded NY POS Contract. The Doe Fund (one of eight nonprofits to receive a CAURD) said earlier this week that Dutchie would handle the store’s point of sale system, payment processing, and delivery interface, and will connect them to New York’s seed-to-sale tracking system. The store will offer on-site shopping and in-store pickup at first, and will later add delivery.
YourWay auditor, MGO, resigns. In a letter provided to the Company on December 6, 2022, MGO indicated its reason for resigning was based on its inability to determine the source of cash deposited by the previous CEO of YourWay on three separate occasions. As per MGO's letter, there were concerns over the inability to corroborate "that the cash came from the proceeds he received when the CEO's former company, Labtronix, was acquired by the company."
🏬 Retail / Cultivation
Housing Works, a Non-Profit Supporting Formerly Incarcerated New Yorkers, to Make First Cannabis Sale in Manhattan December 29. Governor Kathy Hochul announced today that sales of legal, regulated adult-use cannabis will start on December 29 at a dispensary in Manhattan, operated by Housing Works, the nation's largest minority-controlled HIV/AIDS service organization and largest community-based HIV/AIDS service organization. The non-profit, based in New York City, operates a range of direct and support services for people living with HIV/AIDS, the homeless, formerly incarcerated, and justice involved individuals. It also operates a network of charitable retail storefronts. This historic event will mark a critical milestone in the Seeding Opportunity Initiative, which was designed to set New York on a path to fulfilling the goals of New York's Cannabis Law by building an adult-use cannabis industry that offsets the harms resulting from the disproportionate impact of cannabis prohibition. The Company’s POS will be powered by BLAZE.
Good Lettuce Company partners with urban-gro for the design and construction of Pennsville, NJ cultivation facility. The Company has been granted a conditional Tier VI cannabis cultivation and manufacturing license, and expects its annual to be approved January 12th, 2023. The facility will be approximately 180,000 square feet once fully built out and will be outfitted with equipment for cultivation, extraction, and other value-added processes. Phase one of the project will encompass roughly 60,000 square feet, with phases two and three adding 120,000 square feet. The Company has awarded urban-gro with an initial construction design-build contract of $20 million for phase one of the project.
Verano opens MÜV Lake City, FL. This is the Company’s 62nd Florida location and 120th retail location nationwide. Verano has opened 21 new MÜV locations this year.
Curaleaf opens Tallahassee, FL Dispensary. The new 3,414 sq ft location is Curaleaf's 55th in the Sunshine State and 145th nationwide.
🌱 Product
Hall of Flower dives into 10 tips from LAPGC & SPARC budtender to for brands. Hall of Flower speaks to Camran (aka Yung Slabby) of LAPGC in Los Angeles and Joey Estens, Sebastopol Product Coordinator at SPARC, about what they’ve learned from sales in 2022.
🧔 People
Charlotte’s Web appoints Jessica Saxton as CFO. Saxton has held senior finance positions with some of America's leading companies including Anheuser-Busch InBev, General Motors, and Owens Corning.
Greenlane Changes Board of Directors. Nick Kovacevich, Adam Schoenfeld, and Richard Taney will step down from the company's Board of Directors; and Craig Snyder, incoming CEO, will join the company's Board. The reduction of the Board to five members reaffirms the board's commitment to improve economics.
Maryland Medical Cannabis Commission Chair Steps Down as Regulatory Authority Transitions to Alcohol and Tobacco Commission. Maryland voters approved Question 4 in the November election to legalize adult-use cannabis. The measure, which legalizes the possession of cannabis for adults 21 and older beginning in July, also transitions the regulation of medical cannabis from the Medical Cannabis Commission to the Alcohol and Tobacco Commission in 2023.
🎙️ Interviews
Aaron Miles, CIO, Verano | Highly Objective
Metrc CEO Michael Johnson wants a reputation redo for the track-and-trace platform | CBE
Ricky Williams Wants to Bring the Sports Bar to Cannabis | Boardroom
2023 Industry Outlook: Q&A With BDSA’s CEO Roy Bingham | CBT
Petalfast CEO Jason Vegotsky | Green Market Report
Fast Money’s Tim Seymour | NCV
Treez CEO John Yang | 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.