🏛️ SAFE Banking Act, reintroduced, again
Twitter allow product photos in ads. Delaware becomes 22nd state to legalize, Minnesota looks to be next. Schwazze acquires Everest Apothecary (NM) for $38M. AVD prevails over CCELL in lawsuit.
💬 If you haven’t seen me at the usual conferences (Benzinga, Trailblazers, MJUnpacked, and Hall of Flowers next week), it’s because my wife and I welcomed our second child to the world on 4/20 👶. So please reach out to catch up or let me know who should be on a future podcast as I’m getting back to recording next week.
SAFE Banking Act, reintroduced, again, for eighth time. After multiple failed attempts, investors may remain skeptical that the legislation will ultimately go through, according to Jefferies analyst Owen Bennett, “We are optimistic this actually passes into law this year,” he said. — CNBC
Senate Majority Leader Chuck Schumer, D-N.Y., expressed his support for the legislation and said he would work to make sure the legislation includes criminal justice provisions when it reaches the floor
The bipartisan nature of the SAFE Banking Act’s reintroduction appeared to boost hopes of more relief to come in the industry
60 votes are needed to advance legislation in the Senate, Democrats now hold a 51 to 49 in the Senate. 9 Republicans have co-sponsored past SAFE Banking efforts, this version has five Republican co-sponsors
Twitter Bolsters Charm Offensive With Cannabis Advertisers. Twitter is now letting cannabis companies post pictures of their products in ads, less than three months after it first opened the door to their paid-for posts with heavier limitations. — WSJ
Previously they could advertise their businesses and link out to websites but couldn’t depict the actual products they sold
The company has also increased the number of states where advertisers can target consumers for medical and recreational cannabis
Despite the update to its policy regarding product-specific content, Twitter still prohibits cannabis advertisers from using common direct marketing phrases such as “10% off” and “click to buy”
Delaware is the 22nd state to legalize recreational cannabis. Gov. John Carney allowed the two bills to become law without his signature. — Delaware Today
The General Assembly passed two bills related to marijuana legalization this month: House Bill 1 and House Bill 2
House Bill 1 removes all legal penalties for use or possession of a “personal use quantity” of marijuana for those over 21. House Bill 2 regulates and taxes recreational cannabis similarly to alcohol. It also creates a framework for a legal cannabis industry from production and manufacturing to marketing and sales
Licensed dispensaries won’t open their doors until August 25, 2024
Minnesota House passes recreational marijuana bill in vote of 71-59. The proposal would create a new state Office of Cannabis Management, tasked with oversight. — CBS News
Minnesotans looking to cash in on new business would apply for state licenses to grow, manufacture or sell marijuana at dispensaries
It allows a person to keep 1.5 pounds of flower in their homes, grow up to eight plants and have two ounces in a public place
Gov. Tim Walz intends to sign the bill once it gets to his desk
Georgia Access to Medical Cannabis Commission grants five dispensing licenses to Trulieve and Botanical Sciences. Trulieve Georgia submitted three applications for facilities in Marietta, Pooler, and Macon, and Botanical Sciences LLC submitted for facilities in Pooler and Marietta. — Now Habersham
With the approval, the companies will have 120 days to open their doors. Each company can apply for up to six dispensing licenses.
Spots on the registered patient list are only open to people with serious diagnoses, including end-stage cancer, Parkinson’s disease or Alzheimer’s disease
Texas House Passes Marijuana Decriminalization Bill. The initial approval is for a bill to decriminalize marijuana in the state. — Marijuana Moment
The vote comes about a month after the House Criminal Jurisprudence Committee unanimously passed the measure, which would remove the risk of arrest or jail time for low-level possession of cannabis and allow people to eventually erase cannabis issues from their criminal records
Harlem Businesses Sue to Stop Cannabis Dispensary Planned for 125th Street. The lawsuit suggests more problems may be ahead for New York State’s troubled rollout of the recreational marijuana industry. — New York Times
The suit, filed by the 125th Street Business District Management Association in State Supreme Court in Manhattan, seeks to cancel the state’s lease on a storefront at 248 West 125th Street, across from the Apollo Theatre
While the association said it does not oppose having a dispensary on 125th Street or elsewhere in Harlem, it said the current location is “irredeemable” because it would add to the crime, congestion and open drug use already plaguing the area
Dutchie admits ‘failures’ on 4/20, promises payout to marijuana retailers. A “series of cascading failures” was responsible for Dutchie’s e-commerce platform outage that impacted marijuana retailers on 4/20. — MJBizDaily
As a make-good, Dutchie CEO Tim Barash promised to pay out retailers that use the Oregon-based cannabis tech platform “an amount equivalent to our estimate of your lost profits” during the 4/20 interruptions
After reporting “elevated error rates” on Tuesday and Wednesday, Dutchie’s e-commerce platforms went down for a part of 4/20
In a LinkedIn post, Barash blamed “an issue” with the company’s database provider for the failures
Forbes 42.0 List. Forbes interviewed analysts, investors, entrepreneurs, executives and business owners, studying sales data and financial documents to identify the 42 entrepreneurs and leaders who are leading the green rush. — Forbes
Publicly-traded companies were not considered in order to highlight smaller, entrepreneurial brands and people revolutionizing the industry from the ground up—and bettering its chances at legalization
Looking at 420 by the Numbers. More shoppers than ever spending fewer dollars than in previous years, with plenty of exceptions to skew the results. — mg
Sales were up 13.8% compared to the previous four weeks. Sales during the one-month lead-up to 420 were up 18.3% in 2023 (LeafLink)
83% of transactions were cash, average basket size down 11% (Flowhub)
Massachusetts (up 68.8% over typical Thursday) and Illinois (up 74.6% over typical Thursday) saw the smallest lift compared to the 136.7% lift on average (Headset)
16% decrease in sales vs. 2022’s 4/20 (Jane)
Schwazze has acquired certain assets of Sucellus (Everest Apothecary) for $38M. The consideration for the proposed acquisition is US$38M and will be paid in a combination of cash, a four-year seller note and Company common stock. Everest is a New-Mexico-based licensed medical and recreational cannabis provider that consists of 14 dispensaries, one cultivation facility and one manufacturing plant. The dispensaries are located in Albuquerque, Santa Fe, Las Cruces, Los Lunas, Sunland Park, Belen, and Texico. Everest's approximately 16,000 square feet of cultivation and 8,500 square foot manufacturing facility are located in Albuquerque.
AWH closes Acquisition of Four Maryland Dispensaries. The four licensed dispensaries in Aberdeen, Crofton, Ellicott City, and Laurel under the names Nature's Medicines and True Wellness from Devi. This is the Company's seventh state.
Glass House Brands closes Turlock Natural Healing Center Dispensary acquisition. Calculation and payment of consideration for the acquisition of Turlock will occur at the end of its sixth full calendar quarter of operations, at 6x its annualized EBITDA1 in that quarter. The consideration will be paid 80% in new equity shares priced at the 25-day volume-weighted average price (VWAP) of Glass House equity shares as of the day before the date that the Turlock earnout payment is finally determined, and 20% in the form of an unsecured promissory note bearing interest of 8% annually and maturing after the four-year anniversary of the closing date.
Ispire Technology Exercise Full Overallotment Option from IPO. Underwriters of its recently completed IPO have fully exercised their option to purchase an additional 405,000 shares of common stock to cover over-allotments at the IPO price of $7.00 per share, resulting in $21.7M of gross proceeds from the offering.
SC Labs Expands into Arizona with the Acquisition of C4 Laboratories. C4 Laboratories is one of the first Arizona cannabis labs offering advanced testing capabilities to ensure quality and accurate testing. SC Labs is now licensed and accredited in five states: California, Colorado, Michigan, Oregon and Arizona.
📄 Company Updates / Earnings
AVD prevails over China-based CCELL in USITC cannabis vaping dispute. The US International Trade Commission ruled definitively in favor of US cannabis vaporization leader AVD (Advanced Vapor Devices) in a year-long patent infringement investigation initiated by Chinese e-cigarette maker Shenzhen Smoore Technology Limited, which owns CCELL. The Commission affirmed an administrative law judge's February 2023 finding of no violation of CCELL's outmoded e-cigarette patents. Under the ruling, there is no violation by AVD's cartridges, components, or products.
Cookies faces lawsuits alleging kickbacks, personal enrichment. Cookies is accused in separate lawsuits filed by current investors and a onetime business partner of using coercive “strongarm” tactics and bullying to force them to pay company executives “millions of dollars in personal benefits and kickbacks” as a cost of doing business with the brand. The two lawsuits, filed in Los Angeles County Superior Court, claim Cookies President Parker Berling and other board members and executives solicited and pocketed “kickbacks” in the form of cash, jewelry and other gifts. Berner has rejected the claims but did not provide comment when MJBizDaily reached out.
TerrAscend Continues to Progress Towards TSX Listing. Preliminary proxy statement filed which includes details of the internal re-organization necessary for Listing. Shareholder vote scheduled for June 22nd with trading on the TSX expected to commence shortly thereafter, subject to approval
Curaleaf to Restate Certain Previously Issued 2022 and 2021 Financial Statements. The Company is finalizing the exact adjustments for these reported prior periods, and currently anticipates that the adjustments will result in a reduction of aggregate revenue for the full 2021 fiscal year of ~1.25%, and a reduction of expected aggregate revenue for the full 2022 fiscal year of ~0.75%.
POSaBIT Q4 and FY 2022 Financial Results.
Q4: Total revenue was $24.9M, up 141% compared with $6.4M in Q4 2021 (65% GM vs. 28% GM in Q4 2021), Adjusted EBITDA of $12.3M, Net income was $9.4M. 2022: Total revenue was $49.8M, up 134% compared with $21.3M in 2021 (45% GM vs. 26% GM in 2021), Adjusted EBITDA was $10.4M, Net income was $8.0M. $3.1M cash as of December 31, 2022.
SLANG Worldwide Q4 and FY 2022 Financial Results.
Q4: Revenue of $11.8M, compared with $8.8M in Q4 2021, Adjusted EBITDA of ($.06M), compared with ($2.9M) in Q4 2021, EBITDA of ($1.8M), compared with ($4.9M) in Q4 2021. 2022: Operational cash flow in Q4 FY2022 and again subsequent to the end of the year in Q1 FY2023. Revenue from continuing operations for FY 2022 was $38.19M, compared with $37.78M in FY 2021, Adjusted EBITDA of ($3.65M), compared with ($5.63M) in FY 2021. $11.9M cash as of December 31, 2022.
Jushi Changes Auditor from Marcum to MGO. Marcum’s dismissal was not the result of any disagreement between the Company and Marcum on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. There are no "reportable events" between the Company and Marcum.
🏬 Retail / Distribution
Nabis opens 87,000 sq ft Supercenter in Tulare County, CA. Situated in the foothills of the Sierra Nevada mountains, the new monumental structure strengthens the company’s logistical foundation, increases accessibility of its services to manufacturers and retailers across the state. This facility is the first, and largest, of four buildings on Nabis’ Woodlake Warehouse property, which will total 350,000 sq ft once completely operational. With logistical services including timely deliveries to its robust network of retailers, innovative credit management services for its brand partners, and wholesale data-backed analytics, this opening will streamline Nabis’ intake and order fulfillment processes to be increasingly scalable. The company currently supports over 300 brands and 1,300 retailers.
Trulieve open Georgia's First Medical Cannabis Dispensary in Macon, GA. The state’s approval of the dispensing licenses was heralded as a milestone because it means that patients on the Georgia Department of Public Health’s Low-THC Oil Patient Registry finally have legal access to medical cannabis.
Body and Mind branded-dispensary opens Markham, IL. The Company has options to acquire the Body and Mind-branded dispensary in Markham, IL along with the other Illinois Body and Mind-branded dispensary pursuant to a convertible credit facility between DEP and each of NMG IL 1, LLC and NMG IL 4, LLC and membership interest purchase agreements between DEP and the members of NMG IL 1, LLC and NMG IL 4, LLC. The dispensaries are managed by the Company.
MariMed opens Panacea Wellness Dispensary in Beverly, MA. This is the Company’s third operational dispensary in the state and the tenth dispensary that MariMed owns or manages across four states. The dispensary is located in Beverly, a densely populated city located north of Boston.
Columbia Care opens 9th Dispensary in Norfolk, VA. This is Company’s 35th Cannabist dispensary and 85th dispensary nationwide. Columbia Care operates ~148,000 sq ft of cultivation and manufacturing capacity in Virginia, and has a retail presence in five of the most major populated cities across the state.
4Front Ventures Launches Flavored Blunts in the Infused Pre-Roll Category. The product will be under its 1988 brand, with the addition of infused 1 gram blunts in four new varieties: Fuzzy Peach, Juicy Mango, Candy Clouds and Lemon Squeeze. 1988 pre-rolled 1 gram infused blunts are filled with 4Front's choice nugs, and rolled into tobacco-free blunt cones—available as singles in doob tubes. They are infused through a homogenized mixing process that evenly distributes the oil throughout the inside of the blunt for a clean burn.
Ispire Technology Strategic Partnership with Cookies. Under the terms of the supply agreement, Cookies will work with Ispire in good faith to help facilitate the purchase of an aggregate 15 million units of mutually agreed Ispire products by Cookies’ third-party retail and wholesale partners. Ispire will also provide a dedicated product team to support Cookies’ product needs.
springbig introduces Brands Marketplace Feature. The Company's data-driven solution tracks pertinent consumer trends within each of its Retail Clients including time of purchase, types of products purchased and the frequency at which customers buy particular items from said Retailer. Using advanced machine learning algorithms, the Brands Marketplace analyzes a customer’s shopping habits and identifies patterns in their behavior, preferences and demographics.
Garden Society enters Ohio. Garden Society will launch medicinal edibles, including chocolates and gummies, in four Bloom Medicinals dispensaries in Akron, Seven Mile, Painesville, and Columbus; Columbia Care Marietta and Logan locations; Harvest Columbus and Beavercreek, and Verdant Columbus. Ohio reported $478.8M in medical marijuana sales in 2022, according to the Ohio Department of Commerce, up ~26% over sales of $381M in 2021.
Jones Soda bringing cannabis-infused beverages, edibles to Michigan. Maxxx Labs will handle the manufacturing and distribution in Michigan, which has more than 1,050 dispensaries throughout the state. The summer launch in Michigan will include the full portfolio of current Mary Jones products, including Mary Jones 10mg and 100mg THC-infused sodas and THC-infused syrups.
TerrAscend enters into a 5-year licensing agreement with Cookies in Maryland. The Agreement provides access to all of Cookies' current flavors including Gary Payton, Cereal Milk, Georgia Pie, The Soap, Medellin and Pancakes. Cookies strains and products are now available in Maryland in limited quantities at both Company-owned retail as well as third-party dispensary locations.
TILT Holdings appoints Tim Conder as Interim CEO. Gary Santo has resigned as CEO. Conder has been a Board member since October 2019. Previously, Conder served as the Company’s President and COO from 2019 until 2020, following TILT’s acquisition of its former business unit Blackbird.
GTI adds Ethan Nadelmann to Board of Directors. Nadelmann is the founder of both the Drug Policy Alliance, where he served as executive director from 2000 to 2017, and prior to that, The Lindesmith Center, an Open Society Institute project that he directed from 1994 to 2000. Additionally, Nadelmann co-founded the International Harm Reduction Development Program of the Open Society Foundations (OSF) and served on its advisory board as well as that of the OSF’s Global Drug Policy Program.
The 4/20 no cap recap: what was different in 2023? | High Rise
James Yi, CEO, Leaf Trade | Ganjapreneur
👋 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.