🗳️ Trulieve contributes another $28M to Amendment 3 efforts, bringing total contribution to $141M
Body and Mind $2.3M Credit Facility. Chicago Atlantic $50M Unsecured Term Loan. Canopy Growth early prepayment on $100M loan. RIV Capital picks Nabis for NY distro. Green Dragon to cease operations.
🗽 I’ll be at Business of Cannabis: New York 2024 in two weeks (November 12th), if you’re interested in tickets, use this link or code (OBJECTIVE20) for 20% off.
🥃 We are also organizing an event (Lower East Side) after the conference ends in the evening for industry leaders/investors. We hosted a similar mixer at Soho House in Chicago last month and had very positive feedback from sponsors/guests. If you’d like to get involved as a sponsor, let me know (thanks to Crowe, K&A, Petalfast, Prelude and Weedmaps for sponsoring the last one).
🌿 Industry
America’s Embrace of Cannabis. Public opinion has quickly changed. The shift was unusually quick for American politics; it’s very rare for the bipartisan consensus to flip in less than a generation. Americans’ views on domestic policy are largely stable, with legalization being an exception. In 2000, 31% supported it, now 70% do. The new consensus formed long before politicians caught up. Most Democrats have supported legalization since the late 2000s. Most Republicans have since 2017, according to Gallup. Why did public opinion change so quickly? One explanation is exhaustion with the war on drugs.
More than 20 Kentucky businesses awarded medical cannabis licenses. There were four categories of business licenses for Monday’s lottery: tier I cultivator licenses, tier II cultivator licenses, tier III cultivator licenses and processor licenses. There will also be a lottery for dispensaries.
New York’s Cannabis Fund Became a Disaster. Its Managers Earned $1.7M Nonetheless. Records obtained by THE CITY show that the three managers, who operate Social Equity Impact Ventures (Bill Thompson, a former New York City comptroller and mayoral candidate; former NBA star Chris Webber; and Lavetta Willis, a former sneaker entrepreneur) earned $1.7M over the most recently tallied 12-month period and stand to make millions more in years to come, even though the New York Cannabis Social Equity Investment Fund has faced charges of predatory lending, secrecy and mission failure. The fund has financed only 21 stores in 2.5 years.
Numerous celebrities come out in support of legalizing Adult-Use Cannabis in Florida. Rick Steves states that his support for Amendment 3 is not “pro-pot” — it’s simply common sense. Dave Portnoy posted a video saying “It's not right that now that I'm back in Florida I can't legally eat pizza, smoke weed and watch football in the privacy of my own home. Vote hashtag#YesOn3 on Nov 5th to make weed legal in Florida.” According to the most recent polling, Amendment 3 is poised to pass, with 66% of respondents saying they plan to vote for the measure. The measure is facing mounting opposition from Gov. Ron DeSantis, who has come out strong against the bill, even using government funds to create attack ads against the amendment. And because it's up to the legislature to regulate the industry if the ballot initiative passes, lawyers in the space think it's entirely possible that there may be a fight ahead.
Washington is still relying on ‘stopgap’ tracking software. Full-service “seed-to-sale” tracking exists in other states, but, in Washington, that type of system has “yet to be fully realized,” despite 12 years of development. The Liquor and Cannabis Board does not expect to launch a better tracking system until 2031, which would be nearly 20 years after voters approved recreational sales.
Cannabis firms rethink strategy as young women lead cannabis use. Women aged 19 to 30 surpassed men of the same age in cannabis consumption for the first time in 2023, according to a survey by the U.S. National Institute on Drug Abuse (NIDA). Updated branding, market study and women-focused research and development could be needed to capitalize on the growing market potential - a "short-term impact on capex with the long-term benefit of capturing female consumers who are not going anywhere", said Embarc CEO Lauren Carpenter.
Union Drive at BeLeaf Medical Could Impact National Labor Law. When workers responsible for processing and packaging marijuana at that facility signed union cards and filed a petition to unionize in September 2023, BeLeaf Medical argued that the employees were agricultural workers and not entitled to unionize. Agricultural workers are not protected under the 1935 National Labor Relations Act (NLRA), the federal legislation that ensures employees have the right to form a union.
Eight New Mexico cannabis companies sue Biden administration over marijuana seizures. The suit, filed Oct. 22 in U.S. District Court for the District of New Mexico, asserts that Border Patrol agents have been illegally seizing hundreds of thousands of dollars worth of state-legal marijuana goods at checkpoints under the auspices that the industry remains federally illegal, despite the “hands off” approach the federal government has taken towards cannabis since the Barack Obama administration.
What’s in your weed? A Missouri state lab to check industry claims. As cannabis sales soar, state regulators are investing in a new government-run laboratory that will check the safety and strength of cannabis products. The new reference laboratory, which will operate out of the Missouri State Public Health Laboratory in Jefferson City, is expected to be fully operational by Fall 2025. The state appropriated $3.8M for the lab in fiscal year 2024 and $2.4M in fiscal 2025.
An unlicensed cannabis retailer in upstate New York has been ordered to pay $9.5M. This is one of the largest penalties levied in the state’s ongoing efforts to curb illicit operations. State Supreme Court Judge Frederick Reed issued the judgment against George West, the owner of Jaydega 7.0, an unlicensed dispensary in Ontario County. West’s Jaydega 7.0 generated nearly $2.4M in illegal sales from June 2022 through October 2023, New York’s Office of Cannabis Management (OCM) has alleged.
Nebraska, North Dakota, South Dakota and Florida voters will see Cannabis on their ballots next Tuesday, Nov. 5.
Nebraska's medical marijuana initiatives are polling at 59%, but there are legal challenges to the validity of signatures submitted in order to even get the measure on the November ballot
Recent polling conducted by the North Dakota News Cooperative shows what advocates believe is a competitive but winnable contest, with 45% of respondents in favor of the measure and 40% opposed. Another 15% are undecided
Emerson College Polling’s sample of 825 likely voters in South Dakota shows 50% of likely voters plan to oppose a ballot measure to legalize adult-use cannabis. A South Dakota News Watch poll shows 51.4% oppose
Trulieve contributed another $28M last week to Amendment 3. Trulieve has made $141M in cash ($148.8M total has been raised) to Smart & Safe
Alabama judge appoints mediator in medical marijuana dispute. A judge has appointed a mediator to try to negotiate an end to a long-running dispute over who gets licenses to grow and sell medical marijuana in Alabama. Companies who were denied licenses have accused the Alabama Medical Cannabis Commission of violating state law and administrative rules in selecting winners. They have challenged the commission's rules for holding investigative hearings.
FinCEN shows 831 banks and credit unions worked with Cannabis companies in Q2. That’s up from 815 in Q1 2024 and 799 in the prior quarter. FinCEN compiles this data based on financial institutions filing requisite Suspicious Activity Reports (SARs) for marijuana-related business (MRB) clients.
U.S. cannabis industry will need between $65.6B and $130.7B in growth capital over the next decade. Whitney Economics’ report estimates this would generate ~$1.0–$2.4 billion in potential interest revenue for financial institutions willing to lend to cannabis businesses.
Illinois cannabis sales dropped 2% in September to $136.5M. Out-of-state consumers accounted for ~29% of sales, purchasing $30.4M in cannabis products.
Ohio is averaging ~$11.2M/week in Adult-Use sales so far in October. That’s a slight improvement over the per week average of ~$10.8M in September.
Medical Cannabis Sales in Germany Estimated at €420M in 2024. The German Cannabis Report by Prohibition Partners estimates the market will reach €1B+ by 2028.
💵 Deals
Body and Mind enters into Credit Facility with Bengal Catalyst Fund for up to $2.3M. Any funds drawn on the Credit Facility bear interest at 18% per annum, paid monthly and funds loaned are subject to an OID of 5.0% of the principal amount of each Loan. The maturity date is 2 years from the first day any monies are borrowed and the $2.3M is available to be borrowed up to 1 year from execution of the Credit Facility. Until the maturity date, the Company is only obligated to make monthly interest payments and the Company has the right to prepay any amount prior to the maturity date. The Company has an obligation to make loan repayments from any key asset sale. In conjunction with the Credit Facility, the Company has also amended the convertible debentures previously issued to BAM I, a series of Bengal Catalyst Fund SPV, LP, Mindset Value Fund LP and Mindset Value Wellness Fund LP, whereby the Convertible Debentures interest rate has been modified to 15% per annum, half paid in cash and half paid in kind.
Skymint, one of Michigan's largest fully integrated cannabis producers and distributors, online auction will take place on November 12th & 13th. The auction will offer a comprehensive range of Cannabis Cultivation, Production, Lab, Test, and Warehouse Equipment.
Chicago Atlantic Real Estate Finance closes on $50M Unsecured Term Loan. The unsecured term loan matures in October 2028, is interest only and bears a fixed cash interest rate of 9.0%. The Company can prepay the term loan in whole or in part at any time and from time to time subject to applicable prepayment penalties. The full balance of the loan was drawn at closing and was used to repay current outstanding borrowings on the Company’s $110M senior secured revolving credit facility and for other working capital purposes. The Company also announced that Egan-Jones has assigned a rating of BBB+ to both the Company and the senior unsecured term loan.
Canopy Growth makes early prepayment under its $100M senior secured term loan at a discounted price of $97.5M. This results in annualized interest expense savings of ~$14M. Under terms of the amendment, Canopy Growth can make an additional prepayment of $100M at a discounted price of $97.5M by March 31, 2025. If the second prepayment is made, the maturity date will be extended to Sept. 2027.
Safe Harbor Financial Originates $1.07M Secured Credit Facility for Missouri Operator. This is the first tranche of a $5M commitment to refinance existing senior debt. The facility is secured by a portfolio that includes four retail dispensaries and a manufacturing facility in Missouri.
SNDL closes Nova acquisition. The acquisition of Nova's remaining minority interest will streamline SNDL's cannabis retail operations and generate material savings by eliminating public company expenses.
📄 Company Updates
Green Dragon (Eaze) to cease operations by year-end. On Oct. 16, DP Holdings Colorado LLC., doing business as Green Dragon, filed WARN notices in Florida and Colorado regarding upcoming layoffs. In Colorado, 59 employees will be impacted. The company said the layoffs will impact all positions, including cannabis harvesting and packaging. The layoffs are set to be final as of Dec. 31.
Parallel’s legal discovery exposes executive attempts to put out fires. A disgruntled investor lawsuit against Parallel (Surterra Wellness), is about to enter its third year—and the judge overseeing it is pressing to move it forward. The case was filed when a group of unhappy investors with Tradeinvest Asset Management made a $25M investment through a SAFE structure. The group accused Parallel’s management of making misleading statements about its financial health during its capital raising campaign, as the company was unable to make its debt payments shortly after.
CA DCC revokes K.U.S.H. (Kinder Understanding Sensitive Healing) Collective licenses. Included in this notice of embargo are vape cartridges and integrated vaporizers manufactured by K.U.S.H. (Kinder Understanding Sensitive Healing) Collective and sold under the following brand names: Backpackboyz, Circles, Cloud, Cure Injoy, DabGo, Everyday, High 90’s, Hollowtips, Mr. Nice Guy, Pow Wow, Supherb, and The Marathon Cultivation.
Terpene Belt Farms is now one of the largest hemp farms in CA with a 260-acre property. The farm grows millions of pounds of hemp flower each year to produce natural flavors for cannabis products. In order to get an industrial amount of natural terpenes, a huge amount of cannabis flower has to be produced. This year, the company planted 210 acres of hemp, making it likely the biggest cannabis farm in the state. For perspective, the entire Humboldt County pot farming economy had only 388 acres of cannabis permitted last year.
Pleasantrees Commits to a 'Never Remediated' Pledge in Debut Cannabis Campaign, "Enjoy More." Committed to quality and setting a higher standard, Pleasantrees is proud to have never remediated a single gram of flower since being founded in 2018. The company continues to challenge the industry's status quo by shining a light on remediation—a process that removes undesirable elements, such as pesticides, heavy metals or mold, from cannabis flower by using various methodologies of radiation.
Curaleaf International urges the UK government to take immediate action against the rapidly growing online illicit cannabis market. Curaleaf's latest report reveals that illegal online cannabis sales via the open and dark web have risen by 50% in the past two years, and increased by 67% across open web retailers. This is largely being driven by consumers buying illegal cannabis to seek relief from health conditions like chronic pain, insomnia, and anxiety (73% of online purchasers)—many of whom could be eligible for legally prescribed medical cannabis.
🏬 Retail / Distribution
Gotham opens 4,000 sq ft dispensary in Brooklyn’s Williamsburg neighborhood. Adjacent to the bustling five-acre Domino Park and newly opened one-acre Domino Square, the dispensary invites guests in with large arched windows and a custom tree installation by interdisciplinary artist Molly Lowe.
CODES Cannabis opens dispensary in Jefferson City, Missouri. CODES is Missouri’s #1 flower brand and is dedicated to cultivating local cannabis.
Berkeley Patients Group (BPG), the oldest continuously operating dispensary in the United States, will celebrate its 25th anniversary. It all started on Oct. 31, 1999, when several cannabis activists and patients decked out in Halloween costumes gathered on Fifth Street in Berkeley, and bought and sold medical marijuana.
Solful, a small chain of three dispensaries in California, is growing and profitable. Solful’s stores are selling 40 different varieties of cannabis flower at any given time and average 150 different batches a year, Eli says, but nothing hits their retail shelves before it gets smoked and approved of by the two brothers. Solful buys its product directly from farmers packages it under the Solful brand name, with the farmer who grew it prominently displayed. This gives Solful the ability to precisely control what it sells and deliver more money to farmers. Solful pays farmers on average $800–$1,100 per pound of cannabis, significantly higher than the wholesale outdoor cannabis price, which can be as low as $100 per pound.
Trulieve opens 156th Florida dispensary in Lake Placid, FL. The company also opened its 155th dispensary in Orlando on West Colonial last week.
Curaleaf opens dispensary in Miami, FL on Bird Road. The Company's newest dispensary brings its Florida store count to 66, with 151 dispensaries total nationwide.
Verano commences Adult Use Cannabis Sales at Zen Leaf™ Waterbury in Connecticut. In addition to Zen Leaf Waterbury, Verano’s Connecticut operations also include Zen Leaf locations in Meriden, Naugatuck, Newington and Norwich, and the company’s 217,000 sq ft CTPharma cultivation and processing facility in Rocky Hill. All five of the company’s dispensaries in Connecticut have now completed the conversion from medical-only to hybrid sales.
RIV Capital Establishes Distribution Partnership with Nabis. Under the terms of the Agreement, Nabis's technology and expertise will facilitate distribution for the RIV Capital's branded products to licensed retailers across New York state.
🌱 Product
GTI (incredibles) x Magnolia Bakery Expand Partnership. incredibles x Magnolia Bakery THC-infused bars features the bakery's flavors and incredibles’ chocolate. Products will be available to customers at RISE Dispensaries in New York, with a wider rollout to follow in New Jersey and additional markets.
Urban Outfitters Partners with DaySavers to sell joint rollers and pre-roll papers. Now available at Urban Outfitters are the best selling DaySavers’ Perfect Pack machine, and the DaySavers 10-Pack of Ultra-Refined White Artisan Tubes.
TYSON 2.0 and LYT Holdings Enter Exclusive Licensing Partnership to Strengthen Presence in California. LYT specializes in production, sales, and distribution, offering a full suite of cannabis and hemp products. In addition to manufacturing for leading brands, LYT manages its own brand portfolio, including Birdies and Coast, and also holds licensing partnerships with Willie Nelson's Willie's Reserve.
🧔 People
TILT Holdings Chief Revenue Officer Departs. Chris Kelly, who has served as CRO since December 2022, has departed the Company.
Massachusetts Cannabis Commission chooses former employee as executive director. David Lakeman is currently the head of the cannabis division at the Illinois Department of Agriculture—a position he has held since September 2020. He previously served as Head of Government Affairs at the Cannabis Control Commission.
🎙️ Interviews
Is America Switching From Booze to Weed? | Freakonomics
Receivership Specialists on Cannabis Receiverships | GMR
Ricky Williams Explains NFL’s Stance on Cannabis | TDR
Ted Lidie (Alien Labs) x Neema Samari (CBX) | Hall of Flowers
Duncan Mendelsohn on Cannabis Real Estate and Strategic Investing | altvia
Medical Cannabis Revisited: A Podcast with David Casarett and Eloise Theisen | GeriPal