🍻Tilray Brands acquires 8 beer/beverage brands from AB InBev
🍻Tilray Brands acquires 8 beer/beverage brands from AB InBev
Proper Cannabis acquires Nirvana Investments (MO). Story Cannabis Company acquires four Nature’s Medicines licenses (AZ). Maryland reports $87.4M for July sales. 4Front Ventures CFO resigns.
💬 I’m running the Highly Objective Fantasy Premiere League again for EPL fans, let me know if you’re interested in joining this year as the season kicks off this Friday.
🌿 Industry
Small Cannabis businesses take advantage of purported 280E loophole. The Tax Cuts and Jobs Act was passed in 2017. Under Section 471(c), companies with a gross profits of $25M or less can choose if and how they track and report inventory (now $27M, adjusted for inflation). — MJBizDaily
That includes capitalizing overhead, which could include payroll and facility-related costs in its inventory calculation—and therefore deduct some of them from gross receipts
In January 2021, the IRS passed another regulation stating that anyone subject to 280E can’t use 471(c) to reduce the impact of 280E
But some believe the IRS “overstepped” and “fortunately, for businesses subject to 280E, the IRS does not write the tax code; Congress does” said Justin Botillier Founder and CEO of Oregon-based accounting firm Calyx CPA
Florida Attorney General Ashley Moody targets Trulieve in marijuana ballot fight. Moody's office said the measure "misleads" voters in a way to benefit the state's largest medical-marijuana operator, Trulieve. — CBS News
Trulieve has contributed all but a fraction of the nearly $40 million raised by the Smart & Safe Florida political committee for the proposed "Adult Use of Marijuana" initiative, which would go on the 2024 ballot
Trulieve responded saying "The ballot language is clear, states the chief purpose of the amendment and – without a doubt – covers one and only one subject. For these reasons, we trust the court will agree that the voters of Florida should have the opportunity to vote to allow adults in Florida the freedom to use cannabis for their personal consumption"
Cannabis prices in Illinois are some of the highest in the nation. Sales are concentrated among a few retailers, according to Headset. And the state tacks on taxes. — Chicago Sun Times
Illinois saw $950M in Cannabis sales in the first half of this year, but the average price per item in Illinois is 89% higher than in the rest of the U.S. cannabis market, according to a new report from Headset
Illinois has relatively few distinct brands, with just 118, compared to Washington State, which has over 1,000 and Michigan, which has about 800
With such a limited selection, sales are highly concentrated within a few brands. About 68% of sales in Illinois come from the market’s top 10 brands
It's also common in Illinois for retailers to sell house brand products, which when coupled with the small selection of brands, likely contributes to the high prices
The state charges a 6.25% sales tax and an excise tax of up to 25% on sales
You can’t sue, marijuana is illegal, federal judge tells Michigan labs business, Viridis Laboratories. Viridis filed a lawsuit against four CRA employees that made its way to the U.S. District Court for the Western District of Michigan. — M Live
Viridis Laboratories, which operates testing labs verified the safety of a large portion of products on the market
The business’s public problems with the Michigan Cannabis Regulatory Agency (CRA) began in November 2021 when the licensing agency issued a recall on nearly $230 million worth of cannabis tested by Viridis
At the time, the CRA claimed the labs’ results were faulty, inaccurate or unreliable, impacting a huge swath of marijuana in the market. Viridis in court filings said it held as much as a 70% market share on all testing and felt the CRA was trying to “level the playing field”
The federal judge for the U.S. District Court for the Western District of Michigan said constitutional protections don’t apply to illegal entities
Cannabis businesses boom in Maine, but access to banking’s a bust. Maine is home to 285 state-licensed adult-use cannabis businesses, including cultivators, store owners, manufacturers and testing labs, with another 207 businesses in various stages of the approval process. — SunJournal
Retailers in 2022 sold $159M worth of products and are on track to surpass that this year, with around $118M sold through July
In the medical market, according to July 31 data, there were 1,940 providers—known as caregivers—53 active dispensaries, plus nine more waiting for approval
However, well over 1,000 cannabis business owners in Maine’s medical and recreational markets who have struggled with the lack of access to banking
Super Puffed. California marijuana startup Flow Kana spent over $175 million trying to become the biggest name in legal cannabis. Instead, it left Mendocino growers holding the bag. — Alta (thanks to Marc Hauser/Cannabis Musings for pointing out)
The crowded field of startups already had an “Uber of weed” and an “Amazon of weed.” Consistent with the theme, Flow Kana declared its aspiration to be the “Whole Foods of weed”
The business plan required marketing outdoor weed, generally considered inferior to the indoor variety, while also handling the logistics necessary to bring a rural product to urban consumers, while—somehow—also scaling up massively, reaping huge profits, and not breaking any laws
Former Adelanto mayor sentenced to prison in cannabis bribery scheme. Richard Kerr, the former Adelanto mayor who vowed to save his cash-strapped high desert city by embracing Cannabis , was sentenced to 14 months in federal prison in connection with taking bribes from cannabis interests. — LA Times
After 22 years as a Marine, Kerr won election in 2014 in the struggling 53-square-mile city, known for its prisons and immigration detention center. He promised that Adelanto, where 40% of residents lived in poverty, would one day be the “Silicon Valley of medical marijuana”
Voters turned Kerr out of office in 2018, months after the FBI raided his home as part of a corruption probe. In 2021, he was charged with taking more than $57,000 in bribes and kickbacks while mayor in exchange for approving ordinances and securing permits for Cannabis businesses
Last year, a jury convicted Jermaine Wright, Adelanto’s former mayor pro tem, of taking a $10,000 bribe from an FBI agent posing as a Cannabis entrepreneur. He was sentenced to a five-year prison term
💵 Deals
Tilray Brands acquires 8 Beer & Beverage Brands from Anheuser-Busch. The acquisition is expected to position Tilray as the 5th Largest Craft Beer Brewer in the U.S. with 5% Craft Beer Market Share and is projected to generate U.S. Beverage Alcohol Portfolio pro forma revenue of $300M (along with SweetWater Brewing Company, Montauk Brewing Company, Alpine Beer Company and Green Flash Brewing Company). Tilray will acquire Shock Top, Breckenridge Brewery, Blue Point Brewing Company, 10 Barrel Brewing Company, Redhook Brewery, Widmer Brothers Brewing, Square Mile Cider Company, and HiBall Energy.
Proper Cannabis acquires Nirvana Investments. Nirvana is a holding company that operates four dispensaries in the St. Louis area under the N’Bliss banner, located in Festus, Ellisville, Manchester and House Springs. In addition to its four dispensaries, Proper will acquire Nirvana’s manufacturing license—through which it operates 5150 N’Fusion, a cannabis extraction and infusion company—and its transportation license under which it operates Bold Lane Logistics, a company that transports cannabis to growers, manufacturers, retailers and consumers throughout the state. Proper currently operates five dispensaries, four of which are in the St. Louis region in Bridgeton, Crestwood, South County and Warrenton. Proper’s fifth dispensary is in downtown Kansas City.
Story Cannabis Company acquires four vertically integrated cannabis licenses from Nature’s Medicines in Arizona. The Company acquired the assets from Devi Holdings Inc. Financial terms are not disclosed. The newly purchased facilities are currently operating and serving Arizona’s adult-use and medical consumers from two locations in Phoenix, one in Tolleson, and one in Glendale. With the recent additions, Story Cannabis' portfolio in Arizona now includes operations of 11 dispensaries and two cultivation facilities. Story Cannabis is led by CEO Jason Vedadi and COO Joe Sai. Vedadi, founder of Modern Flower which merged with Harvest Health and Recreation in 2017, is the former executive chairman of Harvest Health and former CEO of Oasis Cannabis. Sai is the former COO of Trulieve and former chief of staff and COO of Harvest Health and Recreation.
Blinc acquires vape IR from Sam Bergstrom. The portfolio includes a US patent that enhances Blinc's existing line of vaping devices, introducing an innovative design with improved discreetness and cartridge protection. The portfolio further includes US and internationally pending applications that provide a cutting-edge method for controlling vaporizers, promising a more customizable, yet intuitive and user-oriented vaping experience.
Juul Labs is seeking about $1 billion in funding. The company's valuation in this round is expected to be much lower than the $38 billion it was worth in 2018, before it was battered by lawsuits and FDA scrutiny. The wider e-cigarette market is growing fast as U.S. sales increased ~50% over the three years ending in December 2022. Juul is also currently seeking U.S. authorization to sell a "next-generation" vape that can verify users' ages using a phone app.
📄 Company / State Updates
Maryland reports $87.4M in total retail sales from July 1—July 31.
Illinois reports $140M in July sales. This is the second-highest monthly total since legal sales began in 2020. December 2022 was the highest selling month with $143.9M in sales. $35M of sales came from out-of-state visitors.
Columbia Care closed its Rochester, NY dispensary for nearly a week. The Office of Cannabis Management denied the company a waiver to operate with a virtual pharmacist. The closure affects roughly 750 patients and comes after the company found itself with a shortage of pharmacists caused by a mixture of unexpected medical and parental leaves and vacations. OCM spokesperson Aaron Ghitelman told NY Cannabis Insider that waivers for virtual pharmacists aren’t allowed under the MRTA or by OCM. “If an emergency absence leaves a medical dispensary without an on-site pharmacist, they can bring a pharmacist from one of their other locations to serve on-site, or have temporary or per diem pharmacist employees on call,” Ghitelman said.
Columbia Care will voluntarily delist its common shares from the Canadian Securities Exchange (CSE). Columbia Care will continue trading on the Cboe Canada, the new business name of the NEO Exchange. Cboe Canada will remain the Company’s primary securities exchange, as it has been since the Company’s IPO.
Alabama Medical Cannabis Commission chairman resigns. Stokes' resignation follows a legal complaint against him claiming he unlawfully holds public office as a member of the commission.
StateHouse Holdings extends repayment date of Series A Loan Agreement to February 10, 2027 and increases amount of Series A Loan. Pursuant to the terms of the Debt Modification Agreement, Pelorus is providing an incremental term loan of $7.5M, to bring the total principal amount of the Series A Loan Agreement to $15.0M. The Company will use the funds for repayment of the Series A indebtedness, servicing the Company’s other debts to Pelorus, including any interest owing thereon, and payment of property taxes. The Pelorus Loan will bear an interest rate of one month Secured Overnight Financing Rate (SOFR), plus 12.5%, with a SOFR floor of 4.5%. As consideration for providing the Pelorus Loan, the Company has agreed to grant to Pelorus 136,258,279 warrants of the Company, amounting to 40% of the Pelorus Loan.
MariMed Q2 2023 Results. $36.5M revenue, 46% GM, $6.3M adjusted EBITDA (17% margin). 2023 Guidance: $150M+ Revenue; Gross margin in line with full year 2022 (~48% GM); Non-GAAP Adjusted EBITDA of at $32M–$35M; CapEx of $30M.
IIPR Q2 2023 Results. Rent collection for IIP’s operating portfolio (calculated as base rent and property management fees collected as a percentage of contractually due base rent and property management fees) was 97% for the three months ended June 30, 2023. Executed a new lease with a tenant at IIP’s Perez Road property in Cathedral City, California, which was previously leased to Kings Garden Inc. and is currently under development. MSOs represent 89% of the operating portfolio, excluding vacancies. Public company operators represent 58% of the operating portfolio.
SLANG Worldwide Business Update. In 1H 2023, sales of O.pen cartridges experienced significant growth, up by 16% to 415,082 units, from 357,924 units during the same period in the previous year. In June 2023, launched 2 gram Delta-8 THC disposable cartridges with an initial sales goal of 3,000 units. The Company exceeded this goal by 241%, selling 7,238 units in the first month alone. Entered the MD adult-use market through longstanding partnership with Trulieve.
RIV Capital / Etain Receives Regulatory Approval for Flagship Facility in Buffalo, NY. Upon completion, the Buffalo Facility will significantly expand the Company’s manufacturing and cultivation capabilities. The new facility is expected to focus on the production of premium flower, as Etain shares the Company's expectation that high-quality products and diversified form factors will be key differentiators in building brand and customer loyalty in the burgeoning New York market.
LEVEL launches in New York.
MATU, Bloom’s sister brand, signs up with Petalfast for MA market.
🏬 Retail
Stash Dispensaries opens two Dispensaries in Illinois (Peru and Orland Hills). The Stash team includes former executives of MedMen, Chai Cannabis and Captor Capital. Founder and CEO Matt Longo founded two of MedMen's dispensary locations in West Hollywood and Santa Ana, CA, overseeing operations for each store before their acquisition by Captor Capital. He was the owner/operator of two cultivation facilities, supplying Prop 215-compliant retailers and wholesalers, helped build one of the largest hemp farms in the nation, and has advised the Cambodian government on large-scale cannabis growing.
GTI opens RISE Dispensary Las Vegas on Craig. This is the Company’s 84th retail location in the nation. In addition to RISE Dispensary on Craig, the Company operates RISE stores in Reno, Carson City, Henderson, Spanish Springs, and Las Vegas on Nellis, South Durango, South Rainbow, and West Tropicana.
Cresco Labs opens 32nd Florida dispensary in Palm Bay. The new store brings the Company’s nationwide network to 69 dispensaries.
Columbia Care opens Cannabist Suffolk, the Company’s 36th Cannabist Location and 86th Active Dispensary Nationwide. Columbia Care operates nearly 148,000 square feet of cultivation and manufacturing capacity in Virginia and has a retail presence in six of the most populated cities across the state.
🌱 Product
KANHA (Sunderstorm) enters Chocolate category with Cannabis-Infused S'mores. S'mores delivers a sweet symphony of fluffy marshmallows, crushed graham crackers and rich velvety chocolate made with cacao beans from small farms in Ecuador, Ghana and Ivory Coast. With 10 chocolates per package, each S'more contains 10mg of THC and plenty of aromatic terpenes, and independent labs quadruple test the hybrid cannabis oil to ensure precision dosage and zero pesticides.
Jetty Extracts Solventless Vape is now OCal certified. OCal is the California cannabis comparable-to-organic certification, becoming the very first brand to release an OCal Certified vape. Jetty's OCal Certified Solventless Vape offers customers a level of purity and sustainability unlike anything else on the market.
🧔 People
4Front Ventures CFO Keith Adams resigns to pursue other opportunities. Nicole Frederick will assume the position of CFO on an interim basis in addition to her current role as Director of External Reporting, while the Company completes a search to identify a permanent successor.
BellRock Brands adds Kerry Bilewski as General Counsel and Corporate Secretary. Bilewski has worked both in-house and in private practice, including Summit Materials, Ballard Spahr, Kline Enterprises, and Highline Stages. Most recently Mrs. Bilewski was Assistant General Counsel at FullSpeed Automotive.
Acreage Holdings Chairman Kevin Murphy and Board member Brian Mulroney are stepping down. Dennis Curran, CEO, will assume the role of Chairman of the Board upon Murphy’s resignation. Acreage recently implemented a streamlined governance structure that is appropriately sized for Acreage’s near-term priorities as it prepares for the completion of its strategic arrangement with Canopy/Canopy USA. In connection with this initiative, the Company is evaluating corporate governance actions that would reduce its number of required Board members to three. In the interim, Carl Nesbitt, CFO, and Corey Sheahan, EVP, General Counsel and Secretary, will be appointed to the Board.
AYR Wellness adds Michael Warren to Board. Warren’s 30-year career in financial services is comprised of experience in asset management, capital markets and banking, and includes 20 years of direct management responsibility at Wells Fargo, Deutsche Bank and Goldman Sachs. He previously served on the Board of Directors of Metrodigi, a privately held digital publisher.
🎙️ Interviews
Cannabis eCommerce will be ~$9B in 2023 ft. Jeremy Johnson | The Dime
New Jersey, Social Equity, Curaleaf's Decisions, and Market Dynamics | High Rise
Mitch Baruchowitz, Merida Capital with @mayortoby | X Spaces
Nancy Whiteman, Wana Brands | Proud to work in Cannabis