📰Subversive's 2nd SPAC deal, Tuatara launches $150M SPAC, Agrify prices IPO.

Additional financings — GAGE, Flower One, Sundial, Supreme. M&A — The Valens Company, GrowGeneration. AZ Rec Sales start strong. Eaze 2020 Report.


🌿Industry

AZ’s new recreational cannabis firms see strong sales, possible supply issues on horizon.

Dispensary operators, which were given first crack at recreational licenses, report that initial adult-use sales were two to three times the value of their usual medical cannabis sales, underscoring the strong demand for newly available rec products, particularly flower. 73 of the state’s 130 licenses were first approved for recreational sales on Jan. 22, and that total increased to 95 licenses approved by last Wednesday. Phoenix, the state’s largest city, received 23 licenses, or 1.37 per 100,000 residents.

An estimate suggests that only 50%—75% of Arizona’s 130 licenses actually have fully built-out and operational offsite cultivation. Arizona is due to issue 26 more licenses under a social equity program, as well as a smaller number of licenses in so-called “empty counties” with zero dispensaries or only one dispensary. Curaleaf doubled the size of its Arizona-based cultivation operations over the course of the past year, and renovated four of its dispensary locations to add more registers. The company also implemented a new point-of-sale system just five days before launching adult-use sales.

Chuck Schumer Says Marijuana Reform Bills Are Being Merged As Congress Moves To Legalize. Senate Majority Leader Chuck Schumer (D-NY) says lawmakers are in the process of merging various marijuana bills, including his own legalization legislation, as the chamber works to enact reform this session. The legislation that the now-majority leader filed last Congress and the one before that, the Marijuana Freedom and Opportunity Act, would federally deschedule marijuana, reinvest tax revenue into communities most impacted by the drug war and fund efforts to expunge prior cannabis records. It’s not clear which other bills are being merged, but it stands to reason that the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act would be incorporated, given that advocates have strongly pushed for that proposal to be the vehicle for reform. It passed the House last year but did not advance in the Senate under Republican control. In any case, Schumer emphasized that the goal of legalizing marijuana is largely equity-focused.

Eaze 2020 State of Cannabis Report: “How Cannabis Consumers Responded to Crisis” The report aggregates Eaze’s proprietary data to illustrate the behavior of the 400,000+ consumers who purchased via the platform in 2020 (6.5M legal deliveries completed to-date).

Key findings:

  • Edibles #1 for new customers. Overall, edibles accounted for 22% of all sales and were the most popular product in SF, KA, Oakland, and SD. Among first time customers, edibles’ popularity jumped from 14% to 19% between February and April.

  • Cannabis Kept Closing the Gender Gap. Since California’s adult-use market debuted in 2018, the number of new female customers on the Eaze platform has increased by 10% (going from 38% to 48%).

  •  Gen Z Stood By Their Vapes. In 2020, edibles, flowers, and vapes were the top three products across all age groups. Edibles rose to first place for Boomers, Gen X, and Millennials, whereas Gen Z preferred vapes.

Five state medical marijuana markets that could get a boost through reforms.

  • Lawmakers in MN, NY and VA are expected to consider allowing smokable flower – which could double medical marijuana revenues over time. Those three states are projected to generate a cumulative $330M in medical cannabis sales this year. (See graphic above).

  • TX lawmakers are being pushed to relax an onerous 0.5% THC cap and expand qualifying conditions for MMJ treatment in what is one of the most restrictive markets in the country. That would significantly boost sales in what is now a tiny market in the country’s second-most-populated state.

  • In FL’s fast-growing MMJ market, legislation has been introduced to expand licensing opportunities, including for small businesses. Or regulators could be ordered to do so by the state Supreme Court, which is expected to rule soon on the constitutionality of the state’s MMJ licensing structure.

San Diego county Board of Supervisors voted 4-1 to draft policies to allow cannabis growers and sellers to operate in unincorporated areas. The new policies will create a County cannabis program that expands economic access in a socially equitable way, creates good paying jobs and rectifies the devastating impact the war on drugs has had on Black and Brown communities. A few days later, Deputies seize 400 pounds of Cannabis, cash and gun from an illegal Spring Valley dispensary (The Green Room).

Other highlights:

Premium flower demand drives CO wholesale marijuana prices to nearly five-year highs

Vireo Health Registers as a U.S. Reporting Company

IRS Marijuana Rules Overshadowed by Covid Relief, 2017 Tax Law

Leaked Recorded Conversation Details Downfall of iAnthus

NJ Lawmakers Approve Clean-Up Marijuana Bill To Resolve Governor’s Underage Concerns

PA Governor Includes Marijuana Legalization In 2021 Priority List

Revolutionary Clinics (MA) Drops Lawsuit Against Cambridge Over Cannabis Ordinance That Benefits Equity Applicants


💵Deals

Tuatara Capital — $150M Cannabis SPAC IPO. The company is led by CEO/Director Al Foreman, Managing Partner/CIO of Tuatara Capital; COO/Director Mark Zittman, Senior Advisor at Tuatara Capital; and Chairman Richard Taney, Senior Advisor at Tuatara Capital and former CEO of Curaleaf. The company plans to target businesses in the cannabis industry that are compliant with all applicable laws and regulations within the jurisdictions in which they are located or operate. Tuatara Capital Acquisition was founded in 2020 and plans to list on the Nasdaq under the symbol TCACU.

Agrify (AGFY)— $54M IPO (5.4M shares at $10.00). The Company is a developer of premium grow solutions for the indoor agriculture marketplace — using data, science, and technology to empower customers to be more efficient, productive, and intelligent about how they run their businesses. AGFY closed Friday at ~$145M Market Cap ($11.40 x 12,681,790 shares outstanding). Agrify generated $7.8M in revenue and record a net loss of ($9.7M) for the nine months ended September 30, 2020.

Subversive — $687M Qualifying Transaction with InterCure, Israel's Leading and Fastest-Growing Cannabis Company. InterCure (dba Canndoc) is Israel's largest licensed cannabis producer and one of the first to offer Good Manufacturing Practices (GMP) certified and pharmaceutical-grade medical cannabis products in pharmacies across the country. With the largest distribution network, significant logistical capabilities, and a lucrative vertically integrated strategy, Canndoc is the fastest-growing and most profitable cannabis company in Israel, with a Q4 2020 expected EBITDA annualized run rate of $10M+ and positive free cash flow. Canndoc is well-positioned to capitalize on the adult-use market in Israel, which is expected to be legalized in 2021 or 2022. The transaction values InterCure at $300M and Subversive will raise a $65M PIPE to support the transaction.

Gage Cannabis —Final Closing of $50M Regulation A+ Equity Financing. Gage issued 28,571,400 Subordinate Voting Shares for gross proceeds of $50M, the maximum amount qualified under the Company’s offering circular. The oversubscribed Offering included demand from both institutional and retail investors and significantly expanded the Company’s ownership base through the addition of over 1,000 new shareholders.

Flower One — Changes to the Board of Directors and Executive Management, Initial Debt Restructuring and the Initial Closing of $10M and up to $25M in Convertible Debenture Financing. Mitchell Kahn, Eliza Gairard and Kellen O’Keefe, joins Board. Amit Varma, David Wesley and Ken Villazor have stepped down from the Board.

Sundial Growers — $100M Registered Offering. 100,000,000 Series A Units ($0.80 exercise price) and 33,333,334 Series B Units ($0.0001 exercise price). Each Series A Unit will be sold at $0.75 per Series A Unit and each Series B Unit will be sold at $0.75 per Series B Unit, minus US$0.0001.

Supreme Cannabis — $20M Overnight Marketed Public Offering. $0.19 per Unit for gross proceeds of ~$20M. Each unit will be comprised of one common share and one half of one common share purchase warrant, exercisable for 36 months at an exercise price of $0.23 per Warrant Share.

The Valens Company — acquires Canadian Edibles Manufacturer LYF Food Technologies for C$25M. Plus up to an additional C$17.5M in consideration payable upon the business achieving certain earn-out EBITDA milestones. If all of the Milestones are met, the transaction represents a ~4.2x multiple on 2022E EBITDA.

Harvest Health & Recreation — $34.6M Sale-Leaseback. Harvest sold an industrial property totaling ~292,000 square feet for $23.8M. Harvest plans to continue to operate the property as a licensed cultivation and processing facility and expects to recover up to ~$10.8M in tenant improvements from IIP. The total proceeds for the transaction are expected to be ~$34.6M. Harvest currently operates six medical dispensaries in Gainesville, Jacksonville, Kissimmee, Longwood, North Port, and Tallahassee, supported by a cultivation and processing facility in Alachua and a cultivation facility in Gainesville. 

Other highlights:

GrowGeneration — acquires WA-based Indoor Garden and Lighting

Nabis Holdings — Completes Recapitalization

TerrAscend — closes $175M Oversubscribed Non-Brokered Private Placement

Jushi — $4.9M of $9.8M (~51%) Redemption of Senior Secured Notes Due January 2023


🧔People

Papa & BarkleyEvelyn Wang joins as new CEO, Zeeshan Hyder joins as CFO. Adam Grossman, Papa & Barkley's Founder and CEO, will become Executive Chairman. Guy Rocourt, Co-Founder and Chief Product Officer was promoted to President in September and will continue in this role. Wang previously worked at L'Oreal and The Estee Lauder Companies. Most-recently, she served as CMO for Milani Cosmetics. Hyder previously served as CFO at MedMen.

C21 — CB1 Capital's Todd Harrison joins Board. Harrison serves as CIO of CB1 Capital Management, an investment advisory firm that invests in stocks focused on cannabinoid-based wellness solutions and other cannabis-based bio-pharmaceutical applications, therapies, and other use-cases.

SchwazzePratap Mukharji joins Board. Mukharji is a retired consultant with 30+ years in management consulting, the majority with Bain & Company leading its Supply Chain and Service Operations practices, with a concentration in Industrials and Retail.

MediPharm LabsGreg Hunter joins as CFO. Most recently, Hunter was CFO of Medical Pharmacies Group Limited, a pharmacy and medical equipment manufacturer and distributor in Canada. Previously he was with Baxter International and Janssen-Ortho (a Johnson and Johnson company).


🏬New Store Openings / New Product Launches

Cresco Labs — Expands High Supply Brand Portfolio (1g and 0.5g Live Cartridges)

Curaleaf — Harrisburg, PA (97th dispensary). The 2,750 sq ft dispensary is situated in the greater Harrisburg area, strategically located directly off Route 22, the main thoroughfare between Harrisburg and Hershey, serving the Dauphin County area. As the state capital, Harrisburg and its surrounding cities make up the fourth most populated metropolitan area in the state. Of the 23 qualifying conditions for the ~504,000 registered patients and caregivers, pain, anxiety and PTSD account for 80% of all certifications.

Trulieve — Sebastian, FL (73rd FL dispensary)

MÜV (Verano/AltMed) — Clearwater, FL (30th in FL)

Viola — opens in OK, launches High-Potency Vape Products in CO


💻Hiring

Cronos Group — Associate Director, Consumer Insights (Los Angeles)

Canopy Growth — Head of Beverages (Chicago)


🤷‍♂️Somewhat Relevant

This 7-Eleven store got a gaming makeover, and I want to spend the night


👋 Newsletter curated by Dai Truong.