June 01, 2020
 

Planet 13 Announces First Quarter 2020 Financial Results
  • Q1 2020 Revenue of $16.8 million; EBITDA of $2.5 million
  • SuperStore accounted for 10.1% of all Nevada cannabis dispensary revenue in Q1 2020¹

All figures are reported in United States dollars ($) unless otherwise indicated

LAS VEGAS, June 1, 2020 /PRNewswire/ – Planet 13 Holdings Inc. (CSE: PLTH) (OTCQB: PLNHF) (“Planet 13” or the “Company”), a leading vertically-integrated Nevada cannabis company, today announced its financial results for the three-month period ended March 31, 2020. Planet 13’s financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”).

Larry Scheffler, Co-CEO of Planet 13 commented, “I am very proud of the solid Q1 Revenue and EBITDA delivered by our team, despite a sharp COVID-19 related drop-off in traffic in the latter half of March. We continued to grow our market share in Nevada during the quarter, with the SuperStore accounting for 10.1% of all retail cannabis sales in the state in quarter – our best yet.”

While Q2 has been a challenging period for all Nevada businesses, Planet 13 pivoted quickly to a delivery-based model, which has significantly lessened the impact of lower tourist traffic, while broadening the SuperStore’s long-term customer base and opportunity set.

Larry Scheffler, Co-CEO of Planet 13

As Nevada has started reopening, allowing both curbside pickup and limited in-store sales, we have seen a corresponding pickup in sales. As expected, we have also seen continued traction within our delivery program, with over 40% of our customers continuing to choose Planet 13 delivery as their preferred method of shopping.

Bob Groesbeck, Co-CEO added, “Our objectives during this time have been to maintain a solid balance sheet, strengthen and grow our local customer base, expand alternative sales channels and set the Company up for growth on the other side of this pandemic. Prior to the impact of COVID-19 we were heading for another record month in March at the SuperStore and expect the momentum to resume as activity in the state continues to increase. Having renegotiated and closed the acquisition of the Santa Ana dispensary license and lease we’ve added meaningfully to our out-of-state growth profile. We look forward to bringing the Planet 13 experience to Californians. While COVID-19 continues to impact all businesses in Nevada, we see positive signs every day of a progressive return to normal activities. I want to thank our entire team for their efforts, as well as our customers for including us as a part of their daily lives.”

_______________________

1 https://tax.nv.gov/uploadedFiles/taxnvgov/Content/TaxLibrary/NV-Marijuana-Revenue-FY20(4).pdf

Financial Highlights – Q1 – 2020

Operating Results

All comparisons below are to the quarter ended March 31, 2019, unless otherwise noted

  • Revenues were $16.8 million as compared to $13.8 million, an increase of 21.4%
  • Gross profit before biological adjustments was $9.0 million or 53.9% as compared to $7.4 million or 53.8%, an increase of 21.5%
  • Operating expenses, excluding non-cash compensation expense, were $7.0 million as compared to $5.9 million, an increase of 17.3%
  • Net income before taxes of $0.3 million as compared to a net income of $0.1 million
  • Net loss of $1.4 million as compared to a net loss of $1.4 million
  • Adjusted EBITDA of $2.5 million as compared to Adjusted EBITDA of $1.7 million

Balance Sheet

All comparisons below are to December 31, 2019, unless otherwise noted

  • Cash of $13.9 million as compared to $12.8 million
  • Total assets of $66.5 million as compared to $62.9 million
  • Total liabilities of $24.7 million as compared to $21.6 million

Q1 Highlights and Recent Developments

For a more comprehensive overview of these highlights and recent developments, please refer to Planet 13’s Management’s Discussion and Analysis of the Financial Condition and Results of Operations for the Three Months Ended March 31, 2020 (the “MD&A”).

  • On January 20, 2020, Planet 13 announced the opening of dosist™ shop-in-shop wellness experience.
  • On March 19, 2020, Planet 13 announced offering expanded online ordering and delivery services.
  • On March 23, 2020, Planet 13 announced 24-hour delivery service.
  • On April 13, 2020, Planet 13 announced termination of the Santa Ana acquisition.
  • On April 17, 2020, Planet 13 announced the renegotiation of the Santa Ana acquisition.
  • On May 21, 2020, Planet 13 announced the acquisition of a dispensary license and the close of the Santa Ana acquisition.

Results of Operations (Summary)

The following tables set forth consolidated statements of financial information for the three-month periods ending March 31, 2020 and March 31, 2019. For further information regarding the Company’s financial results for these periods, please refer to the Company’s interim financial statements for the period ended March 31, 2020 together with the MD&A, available on Planet 13’s issuer profile on SEDAR at www.sedar.com and the Company’s website https://www.planet13holdings.com.

Outstanding Shares

As at the date of this report, the Company had 86,998,532 common shares and 59,173,872 class A convertible, restricted voting shares issued and outstanding for a total of 146,139,404 shares outstanding. There were 558,507 options issued and outstanding of which 250,834 have fully vested. There were 11,666,653 warrants outstanding and 3,388,589 RSU’s outstanding of which nil RSUs had fully vested as at the date of this report.

Conference Call

Planet 13 will host a conference call on Monday, June 1, 2020 at 5:00 p.m. EST to discuss its first quarter financial results and provide investors with key business highlights. The call will be chaired by Bob Groesbeck, Co-CEO, Larry Scheffler, Co-CEO, and Dennis Logan, CFO.

CONFERENCE CALL DETAILS

Date: June 1, 2020 | Time: 5:00 p.m. EST
Participant Dial-in: 416-764-8688 or 1-888-390-0546
Replay Dial-in: 416-764-8677 or 1-888-390-0541
(Available for 2 weeks)
Reference Number: 134387
Listen to webcast: https://bit.ly/2LYV5xD

Financial Measures

There are measures included in this news release that do not have a standardized meaning under generally accepted accounting principles (GAAP) and therefore may not be comparable to similarly titled measures and metrics presented by other publicly traded companies. The Company includes these measures because it believes certain investors use these measures and metrics as a means of assessing financial performance. EBITDA (earnings before interest, taxes, depreciation and amortization) is calculated as net earnings before finance costs (net of finance income), income tax expense, and depreciation and amortization of intangibles and is a non-GAAP financial measure that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies.

About Planet 13

Planet 13 (www.planet13holdings.com) is a vertically integrated cannabis company based in Nevada, with award-winning cultivation, production and dispensary operations in Las Vegas – the entertainment capital of the world. Planet 13’s mission is to build a recognizable global brand known for world-class dispensary operations and a creator of innovative cannabis products. Planet 13’s shares trade on the Canadian Stock Exchange (CSE) under the symbol PLTH and OTCQX under the symbol PLNHF.

Original press release

May 31, 2020
 

Canadian licensed producers, after twelve consecutive monthly declines through March, posted their second straight gain during May, with the Canadian Cannabis LP Index rising 20.2% to 319.23, far surpassing the performance of the S&P/TSX Composite, which rose 2.8%:

Over the past year, the index has declined 67.3%:

The index remains substantially below the all-time closing high of 1314.33 in September 2018, just ahead of Canadian legalization. In March, it posted a new 52-week closing low of 196.10, a level not seen since late 2016, and it closed 62.8% above that level at the end of May. The index has declined 18.9% from its close of 393.78 at the end of 2019:

The index, which included 35 publicly-traded licensed producers that traded in Canada at the end of March, with equal weighting, is rebalanced monthly. Each of the members is also included in a sub-index, with 9 in the Canadian Cannabis LP Tier 1 Index, 8 in the Canadian Cannabis LP Tier 2 Index and 18 in the Canadian Cannabis LP Tier 3 Index during the month. Please note that at the end of 2019 we began excluding companies with a price below C$0.20 unless they generate quarterly industry revenue in excess of C$1 million. There are currently almost two dozen publicly traded LPs that fail to qualify.

Tier 1

Tier 1, which included the LPs that are generating cannabis-related sales of at least C$10 million per quarter (in 2018, we used C$4 million as the hurdle), which fell in April, was boosted by a rebound in one stock this month, rising 26.7% to 471.32%. In 2019, it declined 38.5%, when it ended the year at 642.23, and Tier 1 has declined 26.6% so far this year, substantially worse than the other tiers. This group included Aphria (TSX: APHA) (NYSE: APHA), Aurora Cannabis (TSX: ACB) (NYSE: ACB), Canopy Growth (TSX: WEED) (NYSE: CGC), HEXO Corp (TSX: HEXO) (NYSE American: HEXO), MediPharm Labs (TSX: LABS) (OTC: MEDIF), Organigram (TSXV: OGI) (NASDAQ: OGI), Radient Technologies (TSXV: RTI) (OTC: RDDTF), Valens Company (TSXV: VGW) (CSE: VGWCF) and Zenabis Global (TSX: ZENA) (OTC: ZBISF). Zenabis, which more than doubled during the month, remains down almost 22% year-to-date. HEXO, the only other member of Tier 1 to outperform the sector during May, remains down 59% in 2020. MediPharm Labs was the only Tier 1 stock to decline during the month, though Canopy Growth and Radient both rose less than 10%.

Tier 2

Tier 2, which included the LPs that generate cannabis-related quarterly sales between C$2.5 million and C$10 million, rose 19.9% to 492.47. In 2019, it lost 44.3% after closing at 569.54 and is down 13.5% in 2020. This group included Aleafia Health (TSX: AH) (OTC: ALEAF), Cronos Group (TSX: CRON) (NASDAQ: CRON) , Delta 9 (TSXV: DN) (OTC: VNRDF), Emerald Health (TSXV: EMH) (OTC: EMHTF), Heritage Cannabis (CSE: CANN) (OTC: HERTF), Supreme Cannabis (TSX: FIRE) (OTC: SPRWF), VIVO Cannabis (TSX: VIVO) (OTC: VVCIF) and WeedMD (TSXV: WMD) (OTC: WDDMF). Emerald Health led the way with a 65% gain that leaves it down about 14% in 2020. Aleafia, Health, Cronos Group, Heritage Cannabis and VIVO Cannabis all rose less than 10%.

Tier 3

Tier 3, which included the 18 qualifying LPs that generate cannabis-related quarterly sales less than C$2.5 million, led in April but lagged in May, rising 17.0% as it closed at 81.97. It ended at 96.76 in 2019, declining 45.0%, and is down 15.3% in 2020. Four names in this group declined, while five gained more than 35%.

The returns for the overall sector varied greatly, with 18 names posting double-digit (or triple-digit) gains, while 5 declined, with the entire group posting a median return of 11.0%, well below the 20.2% average return:

For June, the overall index will have 38 constituents, as CanadaBis (TSXV: CANB) returns and Lotus Ventures (TSXV: J) (CSE: LTTSF) and NextLeaf Solutions (CSE: OILS) (OTC: OILFF) join for the first time. Each of these will also be in Tier 3. Additionally, Aleafia Health has moved from from Tier 2 to Tier 1.

In the next monthly review, we will summarize the performance for June and discuss any additions or deletions. Be sure to bookmark the pages to stay current on LP stock price movements within the day or from day-to-day.

May 28, 2020
 

Visit the TerrAscend Investor Dashboard and stay up to date with data-driven, fact based due diligence for active traders and investors.

TerrAscend Reports First Quarter Net Sales of $34.8 Million and Adjusted EBITDA of $4.9 Million
  • Net sales increased 34% quarter-over-quarter and 139% year-over-year
  • Adjusted EBITDA of $4.9 million
  • U.S. operations generated 25% adjusted EBITDA margin
  • Anticipates Q2 2020 net sales of approximately $45 million, representing 30% quarter-over-quarter growth, with continued gross margin and adjusted EBITDA margin expansion

NEW YORK and TORONTO, May 28, 2020 /CNW/ – TerrAscend Corp. (“TerrAscend” or the “Company”) (CSE: TER, OTCQX: TRSSF), a leading North American cannabis operator, today reported financial results for its first quarter ending March 31, 2020.

First Quarter 2020 Financial Highlights
(Unless otherwise stated, comparisons are made between Fiscal Q1 2020 and Q1 2019 results and are in Canadian dollars)

  • Net sales: Net sales increased 139% to $34.8 million from $14.6 million.
  • Gross margin: Gross margin increased to 45%, compared to 10% (before gain on fair value of biological assets).
  • Adjusted EBITDA¹: Adjusted EBITDA¹ was $4.9 million, compared with $(5.5) million.
    U.S. Operations: The Company’s U.S. operations generated 57% Gross Margin and 25% Adjusted EBITDA margin.
  • Balance Sheet: Cash & equivalents (including restricted cash) of $31.4 million, compared to $8.6 million.
  • Capital Markets & Financing: The Company closed the final tranches of its previously announced private placement in January resulting in proceeds of $12.7 million and completed a loan financing agreement with Canopy Growth in March, providing $80.5 million in capital that was partially used to fully retire an existing credit facility held with JW Asset Management.

Management Commentary

Getting to adjusted EBITDA profitability is a transformational milestone for our Company, and I’d like to thank the team for their tireless efforts towards that goal. These results were driven by the strong performance of our U.S. operations, which continue to perform ahead of plan.

Jason Ackerman, Executive Chairman and CEO of TerrAscend

With our Pennsylvania expansion complete and construction of our New Jersey facilities well underway, we’re confident in the ongoing growth targets that we have set. We remain focused on prudently investing our capital in the markets where we see the greatest and most profitable opportunities.

Jason Wild, Chairman added, “We’ve assembled a high-caliber team that is executing on the opportunities ahead. I’m extremely proud of the results reported today and pleased to see the commitment to driving strong revenue growth coupled with profitability.”

First Quarter 2020 Operational Highlights

  • Tripled Ilera Healthcare’s cultivation output and completed the phase II expansion, with total footprint of 150,000 square feet
  • Announced the opening of two Apothecarium retail dispensary locations in Pennsylvania to serve medical marijuana patients.
  • Issued a permit to cultivate medical marijuana by the New Jersey Department of Health.
  • TerrAscend Canada Inc., a wholly owned subsidiary, entered into a loan financing agreement with Canopy Growth in the amount of $80.5 million pursuant to a secured debenture. A portion of the proceeds received from Canopy Growth was used to retire the outstanding principal and interest amounts under the credit facility with JW Asset Management

Subsequent Events

  • Appointed Jason Ackerman as permanent Chief Executive Officer.
  • Named Keith Stauffer as Chief Financial Officer.
  • Announced a US$30 million non-brokered private placement
  • Closed the initial tranche of the non-brokered private placement, resulting in gross proceeds of US$27.3 million

Outlook and Preliminary Q2 2020 Revenue Guidance

Based on the success of the Company’s operations to-date, TerrAscend anticipates Q2 2020 net sales of approximately $45 million, representing 30% quarter-over-quarter growth. The Company also anticipates ongoing expansion of gross margin and adjusted EBITDA margin beyond Q1 2020 levels.

TerrAscend remains focused on the execution of its U.S. expansion strategy. To date, the Company has grown its U.S. presence, both organically and through targeted strategic acquisitions, which include Arise Bioscience, The Apothecarium, Ilera Healthcare, and State Flower. This has enabled TerrAscend to enter new markets and establish a strong foothold. The Company’s U.S expansion strategy is rooted in a commitment to achieving scale and profitability in the select markets where it operates. To that end, TerrAscend is focused on fully leveraging the expansion completed at the Company’s cultivation and manufacturing facility in Pennsylvania, completing the construction of its cultivation facility in New Jersey, and continuing to add depth to the Company’s portfolio of retail locations in California, Pennsylvania, and New Jersey. The Company continues to evaluate additional markets for potential entry through organic license applications and strategic acquisitions.

Ensuring the health, safety and well-being of its employees, patients, customers, and the communities in which it operates remains TerrAscend’s highest priority. In response to the ongoing COVID-19 pandemic, TerrAscend continues to adhere to stringent, company-wide measures which include taking employee temperatures at the beginning of each shift; thoroughly cleaning equipment and high-traffic areas; using hand-sanitizer between transactions; requiring non-essential employees to work from home; and practicing social distancing from fellow employees, customers and patients. In addition, TerrAscend has implemented convenient drive through services and curb side pick up options at its retail dispensaries, where permitted. TerrAscend’s management team continues to monitor this situation and will proactively implement new measures as required.

Q1 2020 Financial Summary

Net sales increased 139% to $34.8 million in the first quarter of 2020 (“Q1 2020”), as compared to $14.6 million in the first quarter of 2019 (“Q1 2019”). Net sales in the U.S were $30.9 million in Q1 2020, contributing 89% of total consolidated net sales, reflecting TerrAscend’s continued focus on this important market. This increase was driven by the operational scale-up of TerrAscend’s U.S footprint, which the Company has strategically expanded through investments in production capacity as well as wholesale and retail sales presence.

Gross margin, before gain on fair value of biological assets, was 45% in Q1 2020, compared to 10% in Q1 2019. The increase in gross margin is the result of the Company’s shift to higher margin opportunities in the U.S., as well as ongoing initiatives to rationalize its Canadian operations to the current market opportunity.

Q1 2020 G&A expense was $14.6 million, an increase of 66% compared to Q1 2019. The change was primarily driven by the Company’s strategic focus on entering the U.S. market which drove 139% total net sales growth compared to the prior period. TerrAscend expects to continue to strategically invest in acquiring the talent and developing the appropriate infrastructure to ensure continued expansion in the high-growth U.S market while driving operating leverage as the Company’s operations continue to scale.

Adjusted EBITDA was $4.9 million in Q1 2020, compared to $(5.5) million in Q1 2019. On a geographic basis, adjusted EBITDA from the Company’s U.S. and Canadian operations in Q1 2020 was $8.2 million and $(3.3) million, respectively. Adjusted EBITDA margin generated from the Company’s U.S operations was 25%.

Cash and cash equivalents, including restricted cash, were $31.4 million as of March 31, 2020, compared to $8.6 million as of March 31, 2019, resulting from the net proceeds from the $80.5 million Canopy Growth financing arrangement. $64.8 million of those proceeds were used to retire an existing credit facility with JW Asset Management.

Conference Call

TerrAscend will host a conference call tomorrow, May 29, 2020, to discuss these results. Jason Ackerman, Executive Chairman and Chief Executive Officer, Keith Stauffer, Chief Financial Officer, and Jason Wild, Chairman, will host the call starting at 8:30 a.m. Eastern time. A question and answer session will follow management’s presentation.

DATE: Friday, May 29th, 2020

TIME: 8:30 a.m. Eastern Time

WEBCAST: Click to Access

DIAL-IN NUMBER: 1 (888) 664-6392

CONFERENCE ID: 62330066

REPLAY: (416) 764-8677 or (888) 390-0541 – Available until 12:00 midnight Eastern Time Friday, June 12th, 2020

Financial results and analyses are available on the Company’s website (www.terrascend.com) and SEDAR (www.sedar.com).

The Canadian Securities Exchange (“CSE”) has neither approved nor disapproved the contents of this news release. Neither the CSE nor its Market Regulator (as that term is defined in the policies of the CSE) accepts responsibility for the adequacy or accuracy of this release.

About TerrAscend

TerrAscend provides quality products, brands, and services to the global cannabinoid market. As the first North American Operator (NAO), with scale operations in both Canada and the US, TerrAscend participates in the medical and legal adult use markets across these jurisdictions. TerrAscend operates a number of synergistic businesses, including Ilera Healthcare, Pennsylvania’s premier medical marijuana cultivator, processor and dispenser; The Apothecarium, an award-winning cannabis dispensary with several retail locations in California; Valhalla Confections, a manufacturer of premium cannabis-infused edibles; and Arise Bioscience Inc., a manufacturer and distributor of hemp-derived products. TerrAscend holds a cultivation permit in the State of New Jersey and is pending approval for a vertically integrated medical cannabis operation with the ability to operate up to 3 Alternative Treatment Centers. Additionally, TerrAscend holds a Medical Cannabis Processor License in the State of Utah. For more information, visit www.terrascend.com.

Non-IFRS Measures, Reconciliation and Discussion

Certain financial measures in this news release are non-IFRS measures, including Pro forma revenue, EBITDA and Adjusted EBITDA. These terms are not defined by IFRS and, therefore, may not be comparable to similar measures provided by other companies. These metrics have no direct comparable IFRS financial measure. Such information is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

For more information, please see “Non-IFRS Financial Measures” in the Company’s Interim MD&A available on www.sedar.com.

Pro forma revenue is a non-IFRS measure which management uses to capture total revenue plus revenue from pending and closed acquisitions as if such acquisitions had occurred at the beginning of the performance period. The Company considers this measure to be an appropriate indicator of the growth and scope of the business.

EBITDA is a non-IFRS measure which management uses to evaluate the performance of the Company’s business as it reflects its ongoing profitability. EBITDA is calculated as earnings before interest, tax, depreciation and amortization.

Adjusted EBITDA is a non-IFRS measure which management uses to evaluate the performance of the Company’s business as it reflects its ongoing profitability. The Company believes that certain investors and analysts use Adjusted EBITDA to measure a company’s ability to service debt and to meet other payment obligations or as a common measurement to value companies in the biopharmaceutical industry. The Company measures Adjusted EBITDA as EBITDA less unrealized gain on changes in fair value of biological assets and other income plus fair value changes in biological assets included in inventory sold, purchase accounting adjustments, transaction costs, share based compensation and unrealized loss on investments. The Company believes that this definition is suited to measure the Company’s ability to service debt and to meet other payment obligations.

Certain comparative figures have been reclassified to conform to the current period’s presentation.

Caution Regarding Cannabis Operations in the United States

Investors should note that there are significant legal restrictions and regulations that govern the cannabis industry in the United States. Cannabis remains a Schedule I drug under the US Controlled Substances Act, making it illegal under federal law in the United States to, among other things, cultivate, distribute or possess cannabis in the United States. Financial transactions involving proceeds generated by, or intended to promote, cannabis-related business activities in the United States may form the basis for prosecution under applicable US federal money laundering legislation.

While the approach to enforcement of such laws by the federal government in the United States has trended toward non-enforcement against individuals and businesses that comply with medical or adult-use cannabis programs in states where such programs are legal, strict compliance with state laws with respect to cannabis will neither absolve TerrAscend of liability under US federal law, nor will it provide a defense to any federal proceeding which may be brought against TerrAscend. The enforcement of federal laws in the United States is a significant risk to the business of TerrAscend and any proceedings brought against TerrAscend thereunder may adversely affect TerrAscend’s operations and financial performance.

Financial Outlook

This press release contains a financial outlook within the meaning of applicable Canadian securities laws. The financial outlook has been prepared by management of TerrAscend to provide an outlook for the first quarter of 2020 and may not be appropriate for any other purpose. The financial outlook has been prepared based on a number of assumptions including the assumptions discussed under the heading “Forward Looking Information” above and assumptions with respect to production, pricing, and demand, The actual results of TerrAscend’s operations for any period will likely vary from the amounts set forth in these projections and such variations may be material. TerrAscend and its management believe that the financial outlook has been prepared on a reasonable basis. However, because this information is highly subjective and subject to numerous risks, including the risks discussed under the heading “Forward Looking Information” above, it should not be relied on as necessarily indicative of future results. Except as required by applicable Canadian securities laws, TerrAscend undertakes no obligation to update the financial outlook.

TerrAscend undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of TerrAscend, its securities, or financial or operating results (as applicable).

Original press release

May 26, 2020
 
"Mad Money" host Jim Cramer rings the lightning round bell, which means he's giving his answers to callers' stock questions at rapid speed.
May 24, 2020
 

You’re reading a copy of this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015. The newsletter includes unique insight to help our readers stay ahead of the curve as well as links to the week’s most important news.

Subscribe to receive our free weekly newsletter in your inbox each Sunday morning.

Friends,

This past week, the New Cannabis Ventures Global Cannabis Stock Index soared 26%, its best week since late March, when the index bounced off of its weekly all-time closing low and rallied 32%. We ended the week at 32.17, gaining 38% over seven trading sessions and leaving the index almost 90% above its March 18th low:


Even with the big rally over the past nine weeks, the index remains down 24% this year so far and still below levels seen in February. While stocks in general have been in decline since February, when the S&P 500 put in an all-time high, cannabis stocks have been in a bear market for more than a year.

Why Cannabis Stocks Are Going Up

Trying to explain the rationale for a move is always speculation, as no one knows for sure what drives explosive rallies. One explanation may be simply short-covering. It could also be just that traders returned to a sector they had abandoned. The reality is likely a combination of both of these. Quite simply, with prices still way down but a bottom likely in and stocks in general stabilizing, cannabis stocks were ripe for the picking.

The rally began with a small lift Thursday a week ago ahead of the Aurora Cannabis fiscal Q3 financial report. In fact, that day, the stock reversed off on all-time low set early in the session at C$7.50 to close at C$9.20, up 11% on the day. It had begun the week having closed on the 8th at C$10.92. The company exceeded revenue expectations, reduced its operating loss, announced divestitures and guided for positive EBITDA in the September quarter, all of which sent the stock 69% higher last Friday, with U.S. trading exceeding $1 billion and sparking interest across the sector. Written off for dead, with shorts piling on after its reverse split earlier that week, Aurora Cannabis was the initial catalyst that lured traders back to the sector it seems. Also helping to get the market rallying, in our view, was the GTI Q1 report showing revenue in excess of $100 million, well ahead of expectations and driving a big profit.

This past week, Aurora Cannabis again appears to have played a big role, as its American CBD acquisition announcement sent the stock soaring. The New York Post’s picking up a recently published story out of Canada about CBD potentially showing “promise blocking coronavirus infection” was gasoline on the fire. Across the board, volume picked up in the sector during the week.

The Rally May Be Sustainable

A quote by legendary investor Howard Marks of Oaktree in the New York Times in early March caught our attention: “There will come a day when we reach a bottom. We have no idea when or where that bottom will be. But all great investments begin with discomfort. You make the big money buying things no one else will buy.” Of course, he wasn’t speaking directly about cannabis stocks. His comments, which were just two weeks ahead of the S&P 500 low (at least for now!), certainly apply as well to cannabis stocks. We ran a survey in this newsletter, and the respondents were overwhelmingly negative right at the bottom.

It’s always a challenge to call a bottom in real-time, and calling one in the cannabis sector has been an exercise in futility. We shared our view that the bottom for cannabis stocks was likely in with subscribers at 420 Investor the evening Aurora Cannabis reported, though we had certainly expressed our belief that the bottom was possibly in much earlier. For the past two months, we have been discussing our views regularly that while many cannabis operators are likely to be crippled or bankrupted by the escalation of the capital crunch, those that are able to survive will actually thrive, and investors seem to have picked up on this. Three of the top four MSOs and Canopy Growth are outperforming the S&P 500 in 2020. Several ancillary companies in the U.S. are up year-to-date, including GrowGeneration (62%), Innovative Industrial Properties (9%) and Akerna (6%).

The Third Wave for Cannabis Stocks

From our perspective, interest in the sector has just started to return. We expect that a lot of stocks that are rallying could be dead-cat bounces and short-squeezes, but, at the same time, those companies with strong access to capital, good cash flow and defensible valuations could offer investors outsized returns ahead. We note that the four largest MSOs lagged the overall market move since May 13th, with returns ranging from 12.5% to 29.2%, all less than the 37.8% market move. Finally, we think valuations for public stocks are better than they have ever been, and expectations are certainly tempered regarding growth prospects.

We believe the market is transitioning to what we are calling the third wave for cannabis stocks. The first wave began in late 2012 or early 2013, when there were few publicly-traded cannabis stocks and few that were even real companies. The legalization in Colorado sparked a massive rally that petered out until early 2016, when the second wave began. This next phase saw Canada move forward with legalization for adult-use and many states legalize as well, including California. The second wave peaked as California implemented its legalization and was followed by the 2019 vaping crisis and then the pandemic.

The third wave is likely to see regulatory reforms in the U.S. at the state level and possibly the federal level, more states embracing adult-use cannabis such as Arizona, Florida, New Jersey, New York and perhaps Pennsylvania, improvements in key markets like Canada, California and Massachusetts, that have been slow to roll out, well funded private MSOs debut on the public markets and the first cannabis public companies to exceed $1 billion in revenue annually. This next rising tide will not lift all boats, but we are optimistic that investors who follow fundamentally sound companies could enjoy better returns ahead after two straight years with market declines of 34% in 2019 and 55% in 2018.


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Use the suite of professionally managed NCV Cannabis Stock Indices to monitor the performance of publicly-traded cannabis companies within the day or over longer time-frames. In addition to the comprehensive Global Cannabis Stock Index, we offer a family of indices to track Canadian licensed producers as well as the American Cannabis Operator Index.

View the Public Cannabis Company Revenue & Income Tracker, which ranks the top revenue producing cannabis stocks that generate industry sales of more than US$7.5M per quarter.

Stay on top of some of the most important communications from public companies by viewing upcoming cannabis investor earnings conference calls.

Discover upcoming new listings with the curated Cannabis Stock IPOs and New Issues Tracker.

Sincerely,

Alan & Joel

May 20, 2020
 

The Green Organic Dutchman Announces $15 Million Bought Deal Public Offering Plus Over-Allotment Option

TORONTO, May 20, 2020 /CNW/ – The Green Organic Dutchman Holdings Ltd. (the “Company” or “TGOD”) (TSX:TGOD) (US:TGODF), a leading producer of premium certified organic cannabis, is pleased to announce that it has entered into an agreement with Canaccord Genuity Corp. (the “Underwriter”). The Underwriter has agreed to purchase, on a bought deal basis pursuant to the filing of a short form prospectus, an aggregate of 37,500,000 units (the “Units”) at a price of $0.40 per Unit (the “Offering Price”) for aggregate gross proceeds to the Company of approximately C$15 million (the “Offering”).

Each Unit shall consist of one common share (each a “Common Share”) and one common share purchase warrant of the Company (each a “Warrant”). Each Warrant shall be exercisable to acquire one common share of the Company for a period of 48 months from closing of the transaction at an exercise price of C$0.50 per Warrant.

The Company has granted the Underwriter an option (the “Over-Allotment Option”) to purchase up to an additional 5,625,000 Units at a price of C$0.40 per Unit, exercisable at any time, for a period of 30 days after and including the Closing Date, which would result in additional proceeds of approximately $2.25 million. The Over-Allotment Option is exercisable to acquire Units, Common Shares and/or Warrants (or any combination thereof) at the discretion of the Underwriter.

The Units will be offered by way of a short form prospectus to be filed in all provinces of Canada except Quebec. The Offering is expected to close on June 9, 2020 and is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory and stock exchange approvals, including the approval of the TSX and the applicable securities regulatory authorities.

The Company will use best efforts to obtain the necessary approvals to list the Common Shares, Warrants, and the Common Shares issuable upon exercise of the Warrants on the Toronto Stock Exchange (“TSX”).

TGOD intends to use the proceeds of the Offering for general corporate purposes.

About The Green Organic Dutchman Holdings Ltd.

The Green Organic Dutchman Holdings Ltd. (TSX: TGOD) (US‐OTC: TGODF) is a premium certified organic cannabis company focused on the health and wellness market. Its certified‐organic cannabis is grown in living soil, as nature intended. The Company is committed to cultivating a better tomorrow by producing its products responsibly, with less waste and impact on the environment. Its two Canadian facilities have been built to LEED certification standards and its products are sold in recyclable packaging. In Canada, TGOD sells dried flower and oil, and recently launched a series of next‐generation cannabis products such as organic teas, infusers and vapes. Through its European subsidiary, HemPoland, the Company also distributes premium hemp CBD oil and CBD-infused topicals in Europe. By leveraging science and technology, TGOD harnesses the power of nature from seed to sale.

TGOD’s Common Shares and warrants issued under the indentures dated November 1, 2017 and December 19, 2019 trade on the TSX under the symbol “TGOD”, “TGOD.WT” and “TGOD.WS”, respectively, and TGODF trades in the US on the OTCQX. For more information on The Green Organic Dutchman Holdings Ltd., please visit www.tgod.ca.

Original press release

May 17, 2020
 

Cannabis software company Akerna (NASDAQ: KERN), the parent of MJ Freeway, disclosed in its 10-Q for the quarter ending March 31 that it received a $2.2 million Paycheck Protection Program loan in April. The company received the loan, which is guaranteed by the Small Business Administration, prior to guidance that was issued on April 23rd, and it is “evaluating the impact this guidance has on Akerna and the PPP Loan”, though it’s not clear what exactly the company is evaluating.

MassRoots also received a PPP loan that was disclosed in its SEC filings, which created an uproar, as companies that derive revenue from the cannabis industry may be prohibited from accessing SBA loans. Cannabis-focused law firm Vicente, Sederberg stated, “While SBA has not formally addressed the eligibility of marijuana businesses for the broader Paycheck Protection Program, it appears prior SBA regulation and policy guidance may prohibit access to this program by marijuana businesses and certain other types of businesses.”

Akerna can prepay up to 20% of the loan at any time, but, prepayment in excess of 20% will require the company to pay all accrued interest if the loan has been sold on the secondary market. The two-year loan carries an interest rate of 1%, with interest deferred for the first six months. The company didn’t disclose the lender.

May 11, 2020
 

Schwazze, Formerly Operating as Medicine Man Technologies, Inc., Provides Company Update and Announces First Quarter 2020 Financial Results
  • Company to Host Conference Call and Webcast Today at 4:30 p.m. ET
  • Company Completes First Acquisition Amid COVID-19; Remains on Schedule to Roll-up Colorado Cannabis Operators
  • Total Revenues Increase 59.9%; Gross Profit Increases 160.5%; Net Loss Narrowed Significantly

DENVER, May 11, 2020–(BUSINESS WIRE)–Schwazze, formerly operating as Medicine Man Technologies Inc. (OTCQX: SHWZ) (“Schwazze ” or “the Company”), today provided a company update and announced financial results for its first quarter ended March 31, 2020.

Schwazze is uniquely positioned to be a winner as the cannabis industry experiences consolidation, and step by step we are making progress on our stated goal of becoming one of the largest vertically integrated seed-to-sale operators based on revenues.

Justin Dye, Chief Executive Officer of Schwazze

We recently completed our first acquisition, Mesa Organics, and we remain confident that we will make great strides in our outlined acquisition strategy this quarter. These transactions represent just the beginning of what we look forward to accomplishing this year.

“With respect to our financial performance, we had a very strong first quarter characterized by robust top-line growth due primarily to higher product sales and more than doubled our gross profit compared to last year. We also significantly narrowed our net loss despite meaningful investments in our business as we prepare for the future and work tirelessly to execute our strategy. 2020 is poised to be a historic year for our Company, employees, shareholders, communities, and above all, customers,” concluded Dye.

Company Update

  • During the COVID-19 pandemic, the Company’s top priority has been the health of its employees and communities and has therefore enacted measures to do its part to slow down the spread of the virus. It has also collaborated with state and local governments to develop and implement rules and regulations for the cannabis industry throughout Colorado with the underlying goal to protect patients, recreational consumers, employees, and the public. The Company is sincerely grateful to the healthcare providers, government officials, and essential businesses for their tireless work and is keeping those affected by the pandemic in its thoughts and prayers those affected by the pandemic.
  • On March 27, 2020, the Company launched a collective online platform that can now be found at www.schwazze.com/marketplace. Throughout the COVID-19 pandemic, emergency rules and regulations for Colorado cannabis operations have changed. To help Colorado consumers find information and updates on the dispensary operations of our strategic partners, we launched a collective online platform to bring together their ordering capabilities under one marketplace. This has enabled consumers to fulfill their cannabis needs in a manner that was not possible before and we thank our strategic partners for their commitment to supporting cannabis consumers.
  • On April 20, 2020, the Company announced that it would now be doing business as Schwazze (pronounced SHHwahZZ). The new branding reflects the Company’s goal to create a dynamic, innovative culture and brand identity while supporting the current and future house of brands as Schwazze continues to grow. It also further amplifies the Company’s purpose-driven mission to recognize the full potential of cannabis and continue promoting its ability to improve the human condition.
  • On April 20, 2020 the Company completed its acquisition of Mesa Organics and its Purplebee’s business. Mesa Organics operates four dispensaries throughout southern Colorado in Pueblo, Ordway, Rocky Ford, and Las Animas. Purplebee’s is a leading pure CO2 and ethanol extractor and manufacturer, as well as a producer of cannabis products for some of the leading edible companies across the state.
  • At this time, the Company is pleased with how it is trending during the second quarter and remains confident that great strides will be made in the outlined acquisition strategy during Q2. Additionally, the Company believes being deemed an essential business during COVID-19 has enabled not only the cannabis industry to thrive but the Company to continue to make significant progress.

First Quarter 2020 Financial Results

Revenues were $3,203,134 during the three months ended March 31, 2020, representing an increase of 59.9% as compared to $2,003,476 during the three months ended March 31, 2019. Product sales and consulting and licensing fees increased 63.8% and 46.8%, respectively. The increase in product sales can largely be attributed to consumer stockpiling due to the COVID-19 pandemic.

Cost of goods and services were $2,148,535 during the three months ended March 31, 2020, representing an increase of 34.4% as compared to $1,598,712 during the same period in 2019. This increase was due to increased sales of our products, and increased salaries and related employment costs.

Gross profit was $1,054,599 during the three months ended March 31, 2020 as compared to $404,764 during the same period in 2019. Gross profit increased to 32.9% of revenues from 20.2% of revenues during the same period in 2019. This improvement was mostly driven by improved product profitability.

Total operating expenses were $5,165,674 during the three months ended March 31, 2020 as compared to $2,632,791 during the same period in 2019. The increase was primarily attributable to higher salaries and selling, general and administrative expenses related to building an infrastructure to ensure a seamless integration of the numerous pending acquisitions and to help build the proper platform for sustainable growth, along with non-cash, stock-based compensation.

Net other income was $2,731,765 during the three months ended March 31, 2020 as compared to net other expenses of $683,791 during the same period in 2019. This represented an improvement of $3,415,556. The increase in other income (expense), net was primarily due to the forfeiture of contingent consideration in relation to the resignation of an officer and director, and an unrealized gain recognized on the change in fair value of certain derivative liabilities.

Net loss was $1,379,310 for the three months ended March 31, 2020, or a loss of approximately $0.03 per share on a basic weighted average, as compared to net loss of $2,911,818, or a loss of approximately $0.10 per share on a basic weighted average, for the three months ended March 31, 2019.

Conference Call and Webcast Today

Schwazze will host a conference call and webcast today at 4:30 p.m. ET. Investors interested in participating in the conference call can dial 412-317-6026 or listen to the webcast from the Company’s “Investors” website at https://ir.schwazze.com. The webcast will later be archived as well.

Following their prepared remarks, Chief Executive Officer Justin Dye and Chief Financial Officer Nancy Huber will also answer investor questions. Investors may submit questions in advance or during the conference call itself through the weblink: http://public.viavid.com/index.php?id=139701. This weblink has also been posted to the Company’s “Investors” website.

Virtual Investor Conferences Participation

On May 12, 2020, Schwazze is pleased to be participating in the Canaccord Genuity’s Cannabis Conference. The Company will be hosting meetings and presenting a company update at 2:00 p.m. ET via http://wsw.com/webcast/canaccord39/sch/ as part of this virtual conference.

The Company will announce additional virtual conference participation in the coming weeks, please check back on the Company’s website, ir.schwazze.com for information.

About Schwazze

Medicine Man Technologies, Inc. is now operating under its new trade name, Schwazze. Schwazze is executing its vision to become one of the nation’s largest vertically integrated cannabis holding companies by revenue. Upon the completion of its announced acquisitions, its portfolio will consist of top-tier licensed brands spanning cultivation, extraction, infused-product manufacturing, dispensary operations, consulting, and a nutrient line. Schwazze leadership includes Colorado cannabis leaders with proven expertise in product and business development as well as top-tier executives from Fortune 500 companies. As a leading platform for vertical integration, Schwazze is strengthening the operational efficiency of the cannabis industry in Colorado and beyond, promoting sustainable growth and increased access to capital, while delivering best-quality service and products to the end consumer. The corporate entity continues to be named Medicine Man Technologies, Inc.

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

Original press release

May 10, 2020
 

You’re reading a copy of this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015. The newsletter includes unique insight to help our readers stay ahead of the curve as well as links to the week’s most important news.

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Friends,

Since September, we have been detailing the challenges the sector faces with respect to raising capital, a situation set in motion by the vaping crisis and then exponentially magnified by the pandemic. Many operators, both public and private, are burdened with debt and facing an existential threat. Investors in public companies have shied away from both Canadian and U.S. operators with near-term debt maturities that are challenging to address, leaving the equity price under selling pressure.

Companies facing debt maturities have several options:

  • Sell stock to repay existing debt holders
  • Convince the debt holders to take equity
  • Raise additional debt capital
  • Sell assets
  • File for creditor protection

While Aphria wasn’t facing any near-term liquidity issue, the company was extremely proactive addressing a weakness in its balance sheet. Recall that the company issued debt last April, selling US$350 million 5.25% convertible debt in a private placement, with a maturity of 2024. The bonds were convertible at US$9.38, then a 20% premium to the price but, more recently, more than 2X where the stock was trading.

On Friday, the company announced what we think is an extremely smart deal to repurchase 26% of the debt at a big discount. Specifically, it paid US$2.1 million to cover accrued and unpaid interest and issued 18.7 million shares to retire $90.8 million of the bonds, effectively US$4.84 per share, a 31% premium to its recent closing price. To be clear, the debt holders received stock valued at about $69 million, a discount of 24%.

In hindsight, the company would have been better off a year ago selling stock rather than issuing convertible debt, but this transaction reduces debt, improves net cash and lowers interest expense. Shareholders didn’t appreciate these benefits initially, as the stock sold off and ended the day down almost 7%. The best explanations of why the stock declined are that the increased share count is seen as dilution (the 18.7 million shares boosted shares outstanding by 7%) and, perhaps more importantly, that most likely a portion of the stock issued hit the market.

We were a bit surprised that the debt holders agreed to do the deal, so we reached out to the company to gain a better understanding.

The bonds had apparently been trading at about sixty-one cents on the dollar, so this transaction enabled the shareholders to exit the bonds at a higher price, effectively. As the bonds are privately traded, pricing data isn’t readily available to the public. For the debt holders to lose, the stock would have to decline to US$2.96.

So, why is this such a big deal?

We see a path to debt reduction through similar negotiated transactions across the sector. There are several Canadian LPs and U.S. operators with out-of-the-money convertible debt that need to address the maturity over the next 12 to 24 months, depending upon the issuer. Debt holders for some publicly traded convertible notes and presumably private placement convertible notes as well are willing to sell for very low prices, and companies, rather than trying to figure out how to repay them in full, should access capital to buy back the discounted debt or negotiate equity settlement, as Aphria did. Just chipping away over time could help the equity improve as the debt appears to become more manageable, decreasing the risk of a default at maturity, as relying upon other solutions becomes more tractable.

We are encouraged to see Aphria and some of its debt holders create a win-win scenario through the transaction announced Friday, and we are hopeful that holders of debt in other companies will take back reduced principal, effectively, a move that may save many companies that are otherwise executing operationally.


With the recent change in its laws, Colorado is now open to publicly-traded company ownership. A first-mover is Medicine Man Technologies, now doing business as Schwazze, which has closed its first acquisition and is in the process of closing several others to create a very large roll-up in the state. Led by management that played a big role in the turnaround of Albertsons, it is focused on being the nation’s largest vertically integrated cannabis holding companies.

Get up to speed by visiting the Schwazze Investor Dashboard that we maintain on their behalf as a client of New Cannabis Ventures. Click the blue Follow Company button in order to stay up to date with their progress.


New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:


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Get ahead of the crowd! If you are a cannabis investor and find value in our Sunday newsletters, subscribe to 420 Investor, Alan’s comprehensive stock due diligence platform since 2013. Gain immediate access to real-time and in-depth information and market intelligence about the publicly traded cannabis sector, including daily videos, weekly chats, model portfolios, a community forum and much more.

Use the suite of professionally managed NCV Cannabis Stock Indices to monitor the performance of publicly-traded cannabis companies within the day or over longer time-frames. In addition to the comprehensive Global Cannabis Stock Index, we offer a family of indices to track Canadian licensed producers as well as the American Cannabis Operator Index.

View the Public Cannabis Company Revenue & Income Tracker, which ranks the top revenue producing cannabis stocks that generate industry sales of more than US$7.5M per quarter.

Stay on top of some of the most important communications from public companies by viewing upcoming cannabis investor earnings conference calls.

Discover upcoming new listings with the curated Cannabis Stock IPOs and New Issues Tracker.

Sincerely,

Alan & Joel

May 08, 2020
 

Aurora Cannabis Confirms Share Consolidation Effective Date
  • Common shares of the Company will begin trading on the New York Stock Exchange and the Toronto Stock Exchange on a post-consolidated basis at the opening of trading on May 11, 2020

EDMONTON, May 8, 2020 /PRNewswire/ – Aurora Cannabis Inc. (the “Company” or “Aurora”) (NYSE | TSX: ACB), the Canadian company defining the future of cannabis worldwide, confirms today that it has received all necessary approvals for its previously announced consolidation of the common shares (the “Common Shares”) of the Company on a 12 to 1 basis (the “Consolidation”) and confirms that the Consolidation will be effective on May 11, 2020 (the “Effective Date”).

Aurora’s Common Shares will begin trading on the New York Stock Exchange (the “NYSE”) and the Toronto Stock Exchange (the “TSX”) at the opening of trading on the Effective Date under the symbol “ACB” on a post-Consolidation basis.

About Aurora

Aurora is a global leader in the cannabis industry serving both the medical and consumer markets. Headquartered in Edmonton, Alberta, Aurora is a pioneer in global cannabis dedicated to helping people improve their lives. The Company’s brand portfolio includes Aurora, Aurora Drift, San Rafael ’71, Daily Special, AltaVie, MedReleaf, CanniMed, Whistler, and ROAR Sports. Providing customers with innovative, high-quality cannabis and hemp products, Aurora’s brands continue to break through as industry leaders in the medical, performance, wellness and recreational markets wherever they are launched. For more information, please visit our website at www.auroramj.com.

Aurora’s Common Shares trade on the TSX and NYSE under the symbol “ACB”, and is a constituent of the S&P/TSX Composite Index.

Original press release

May 07, 2020
 

Visit the Plus Products Investor Dashboard and stay up to date with data-driven, fact based due diligence for active traders and investors.

Plus Products Reports Audited 2019 4th Quarter and Year-End Financial Results

SAN MATEO, Calif., May 07, 2020 (GLOBE NEWSWIRE) — Plus Products Inc. (CSE: PLUS) (OTCQX: PLPRF) (the “Company” or “PLUS”), a cannabis branded products company in the U.S., today released its audited financial and operational results for the three and twelve months ended December 31, 2019, expressed in U.S. dollars. These filings are available for review on the Company’s SEDAR profile at www.sedar.com and on the Canadian Securities Exchange (the “CSE”) website at www.thecse.com.

Q4 and Year-End Financial Highlights

  • Revenues: Net revenues climbed to $13.9M in 2019, representing a 66% year-over-year growth as compared to 2018 net revenues of $8.4M. Net revenues in Q4 2019 reached $3.5M, representing a 4% year-over-year growth as compared to Q4 2018 net revenues of $3.4M. In December 2019, the Company was transitioning to a new distributor, HERBL Distribution Solutions (“HERBL”). Due to this transition, some sales which otherwise would have taken place in December 2019 were pushed out until January 2020.
  • Gross Profits: Gross profits grew to $2.8M in 2019 compared to $1.1M in 2018. Gross profit margin in 2019 was 20%, up from 13% in 2018. Gross profits increased to $0.9M in Q4 2019 compared to $0.4M in Q4 2018. Gross profit margin in Q4 2019 grew to 26%, up from 13% in Q4 2018. Higher sales volumes and a focus on increasing operational efficiencies diminished the growth of labor and overhead costs relative to sales, increasing gross profits.
  • Operating Expenses: Operating expenses were $27.6M in 2019, up from $7.6M in 2018. Operating expenses were $9.1M in Q4 2019, up from $3.3M in Q4 2018. In 2019, the Company invested in the nationwide launch of its hemp CBD line, entrance into the Nevada adult-use market, and launch of PLUS Mints, along with other investments in hiring talent, gaining market share, as well as building infrastructure and financial capacity to support its future growth.
  • Cash Balance: The Company reported $15.2M in cash and cash equivalents at December 31, 2019. PLUS is capitalized with enough cash on hand to continue executing through the entirety of 2020 without any additional fundraising. The Company made significant changes to its business in Q1 of this year to improve cash flow – detailed below – and expects the impacts of these adjustments to benefit PLUS especially well in light of the uncertainty presented by COVID-19.

2019 Business Updates

Product Launches

  • In April, the Company launched PLUS Mints as its first non-gummy product line. The low-dose products target consumers looking for a discrete, micro-dose experience with 2.5mg or less of THC per serving.
  • In October, the Company introduced a second line of its best-selling gummies including: BALANCE Cucumber Lime, UPLIFT Tangerine, and UNWIND Concord Grape.

Market Launches

  • In September, the Company entered the national CBD market with its line of 100% hemp CBD gummies. The products are currently available online at PlusProducts.com in 43 states and select health and wellness retailers throughout the country.
  • In October, PLUS gummies hit shelves in Nevada, marking the launch of the Company’s second adult-use market. According to Headset Insights, one quarter after market-entry, PLUS was already the second best-selling gummies brand in the state, a market that consists of over 40 gummy brands.¹

General Highlights

  • In July, the Company announced a rebrand of its core PLUS brand, introducing a new look for its line of low-dose, cannabis-infused edibles. The new packaging and product system were designed to go beyond the traditional use of Sativa, Hybrid, and Indica cannabis strains to focus on the science behind unique combinations of THC and CBD.
  • In December, PLUS announced the transition of its primary distributor from Calyx Brands to HERBL. After an extensive review, the Company determined that HERBL was best positioned to scale with PLUS and reliably deliver products to retailers at the lowest cost.
  • According to BDS Analytics, for the second straight year, PLUS had the two best-selling products in California across all categories. The Company’s signature Sour Watermelon UPLIFT gummies and Blackberry Lemon UNWIND gummies topped the list of over a thousand products sold throughout the state during 2019.²

Post-Period End Business Updates

  • In February 2020, the Company entered the wellness and relief segment of the California adult-use market with the introduction of its PLUS CBDRelief brand. The launch represents a significant extension beyond the core PLUS lineup. The new PLUS CBDRelief products were designed with low THC and high CBD ratios to serve the roughly one-third of consumers in the market that are looking to cannabis for relief.³
  • In March 2020, the Company announced a series of material changes to the business in an effort to prioritize an accelerated path towards becoming cash flow generative and continuing to establish itself as a leader in the California edibles market. These changes included:
    1. Reduction of the Company’s workforce by 13 full-time employees, accounting for 20% of its non-production workforce.
    2. Salary reduction for three executive officers ranging from 20% to 50% in exchange for options that will be issued following the current executive financial blackout period.
    3. Marc Seguin, the Company’s Chief Revenue Officer, left the organization.
    4. PLUS and John Legend concluded their engagement. The Company would like to thank Mr. Legend for the part he played in helping to bring the PLUS hemp CBD line to the country.
    5. The Company announced a plan to restructure its equity incentive program to ensure that it continues to be consistent with the mandate of the shareholder-approved Equity Incentive Plan to “promote the interests of the Company and its shareholders by aiding the Company in attracting and retaining employees.”

Management Commentary

“PLUS emerged from a turbulent year in the cannabis industry well positioned to pursue its vision of building a global portfolio of edibles brands,” stated Jake Heimark, co-founder and CEO. “For the second straight year, we were the largest brand in the largest category of the California edibles market and had the two best-selling products across all categories.4 Now more than ever, we believe that the most successful brands will be those that build a reputation for high-quality products that do not damage your lungs.

“Our home market of California has not been without its complications. The legal cannabis market faces growing pains as it competes with a highly active illicit market, works to streamline a disordered regulatory environment, and supports undercapitalized operators across a nascent supply chain. Despite these factors, we believe that California unequivocally remains the most valuable market for building a branded products company in cannabis. In 2019, the state made up 38% of the global adult-use market and is expected to remain 24% of that market through 2024.5

“In 2020, our strategic initiatives are built around three critical objectives: 1) ensuring the safety and health of our employees, customers, and partners during this pandemic; 2) establishing ourselves as the clear, long-term leader in California edibles; and 3) becoming a cash-flow positive business.

Objectives two and three will be driven by the launch of new brands here in California and the continued growth of our core PLUS brand in the markets in which we are operational today. By relying on core capabilities and known distribution channels to drive capital-efficient growth, we are confident in our ability to achieve both our market and financial goals for 2020 and beyond.

Jake Heimark, co-founder and CEO

Covid-19 Update

In March 2020, there was a global outbreak of COVID-19, which continues to rapidly evolve. The extent to which the virus may impact the Company will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions, social distancing, business closures or business disruptions, and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.

While cannabis remains an essential business throughout most of California, it is still too early to understand how COVID-19 will impact PLUS or the market as a whole. To date, the Company has not seen a sustained downside impact on consumer demand in its core California market and has been able to fulfill orders without interruption. The Company believes it is well prepared to respond to this crisis. Please visit plusproductsinc.com/coronavirus to see the actions PLUS is taking to respond to this unique challenge.

(1) According Headset Insights in January 2019
(2) According to BDS Analytics GreenEdge Platform in 2019
(3) According to proprietary research conducted through HJR Associates, a third-party firm contracted by the Company
(4) According to BDS Analytics GreenEdge Platform in 2019
(5) According to Arcview | BDS Analytics – State of the Legal Markets 7th Edition

Conference Call Details

At 5:00 pm Eastern Time / 2:00 pm Pacific Time on Thursday, May 7, 2020 the Company will host a conference call and webcast to discuss the financial results and its recent corporate highlights.

Participant Dial-In Numbers:

Toll-Free: (866) 220-4156

Toll / International: (864) 663-5231

*Participants should request the Plus Products Earnings Call or provide conference ID: 2867687

The call will also be webcast at https://edge.media-server.com/mmc/p/rwodgqqw. Please visit the website at least 15 minutes prior to the call to register, download, and install any necessary audio software. Following the conclusion of the call, there will be an archived audio webcast of the conference call available for replay on the Company’s website at PlusProductsInc.com.

Jake Heimark, Co-founder and Chief Executive Officer and Jon Paul, Chief Financial Officer, will be conducting a question and answer session following the prepared remarks.

About PLUS

PLUS is a cannabis and hemp food company focused on using nature to bring balance to consumers’ lives. PLUS’s mission is to make cannabis safe and approachable – that begins with high-quality products that deliver consistent consumer experiences. PLUS is headquartered in San Mateo, CA.

For further information contact:

Jake Heimark
CEO & Co-founder
ir@plusproducts.com

Investors:

Blake Brennan
Investor Relations
blake@plusproducts.com
Tel +1 213.282.6987

Media:

Megan Sekkas
Public Relations
megan@sekkas.com
Tel +310.279.6811

Non-GAAP Measures:

Adjusted uncompressed weighted average shares outstanding and loss per share.

The Company has additionally determined the adjusted uncompressed weighted average shares outstanding and loss per share, basic and diluted. The Company believes these measures to be representative of loss and comprehensive loss on a per share basis; however, these performance measures have no standardized meaning. As such, there are likely to be differences in the method of computation when compared to similar measures presented by other issuers. Management believes that, in addition to conventional measures prepared in accordance with GAAP, some investors use this information to evaluate the Company’s performance. Accordingly, they are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

Original press release

May 06, 2020
 

Innovative Industrial Properties Reports First Quarter 2020 Results

Acquisitions Drive 210% Q1 Total Revenues, 249% Q1 Net Income and 236% Q1 AFFO Growth Year-over-Year

SAN DIEGO, May 06, 2020–(BUSINESS WIRE)–Innovative Industrial Properties, Inc. (IIP), the first and only real estate company on the New York Stock Exchange (NYSE: IIPR) focused on the medical-use U.S. cannabis industry, announced today results for the quarter ended March 31, 2020.

First Quarter 2020 and Year-to-Date Highlights

Financial Results and Financing Activity

  • IIP generated total revenues of approximately $21.1 million in the quarter, representing a 210% increase from the prior year’s first quarter.
  • IIP recorded net income available to common stockholders of approximately $11.5 million for the quarter, or $0.72 per diluted share, and adjusted funds from operations (AFFO) of approximately $17.8 million, or $1.12 per diluted share. Net income available to common stockholders and AFFO increased by 249% and 236% from the prior year’s first quarter, respectively.
  • IIP paid a quarterly dividend of $1.00 per share on April 15, 2020 to common stockholders of record as of March 31, 2020, representing an approximately 122% increase over the first quarter 2019’s dividend.
  • In January, IIP completed an underwritten public offering of 3,412,969 shares of common stock, including the exercise in full of the underwriters’ option to purchase an additional 445,170 shares, resulting in net proceeds of approximately $239.6 million.
  • In January, IIP issued shares of common stock for net proceeds of approximately $78.2 million under an “at-the-market” equity offering program.

Investment Activity

  • From January 1, 2020 through today, IIP acquired nine properties, totaling approximately 1.1 million rentable square feet (including expected rentable square feet upon completion of properties under development), located in Colorado, Florida, Illinois, Massachusetts, Michigan, Ohio and Virginia.
  • These nine properties represented an aggregate investment by IIP of approximately $202.1 million (consisting of purchase prices and development / tenant reimbursement commitments, but excluding transaction costs).
  • In these transactions, IIP established a new tenant relationship with Parallel (the corporate parent company of Surterra Wellness), while expanding existing tenant relationships with Ascend Wellness Holdings, LLC, Cresco Labs Inc., Green Leaf Medical, LLC, Green Thumb Industries Inc. and LivWell Holdings, Inc.

Balance Sheet Highlights (at March 31, 2020)

  • Approximately $108.3 million in cash and cash equivalents and approximately $272.9 million in short-term investments, totaling approximately $381.2 million.
  • No debt, other than approximately $143.7 million of unsecured debt, consisting solely of 3.75% exchangeable senior notes maturing in 2024, representing a fixed cash interest obligation of approximately $5.4 million annually, or approximately $1.3 million quarterly.
  • 13% debt to total gross assets, with approximately $1.1 billion in total gross assets.

Rent Deferrals (as of May 6, 2020)

  • IIP has undertaken in-depth discussions with each of its tenants in March and April as they navigate this unprecedented pandemic.
  • In light of those discussions, IIP worked with three of its 21 tenants to provide temporary rent deferrals, structured to apply a portion of the security deposit IIP holds under each lease to pay April rent in full, defer rent for May and June in full, and provide for the pro rata repayment of the security deposit and deferred rent over an 18 month time period starting July 1.
  • Pursuant to these amendments, a total of $743,000 of security deposits that IIP holds in cash were applied to the payment of rent for April; and a total of approximately $1.5 million in rent was deferred for May and June. The total of this amount, $2.3 million, represents approximately 3% of IIP’s total revenues as reported for the three months ended March 31, 2020, annualized.

“One of the pillars of our business strategy has consistently been a conservative, flexible balance sheet, and we believe we are exceptionally well positioned to not only weather this unprecedented health crisis and economic disruption, but to continue to make real estate investments on a long-term basis with best-in-class tenant operators,” said Alan Gold, Executive Chairman of IIP.

We remain steadfast in our support of this industry and its bright long-term future, and are working every day through this crisis with our tenant partners toward continuing to build a tremendous future forward of growth and strength for many years to come.

Alan Gold, Executive Chairman of IIP

When we overcome this crisis through the collective ingenuity of our top medical professionals and researchers, the regulated cannabis industry will continue to thrive and be one of the top drivers of growth and good jobs across the country.

COVID-19 Regulatory Update

In the vast majority of states, state and local governmental authorities have recognized both medical-use and adult-use cannabis operations as “essential businesses” per state guidelines, allowing them to remain open and operational, extending as well to the supply chain of the regulated cannabis industry, including cultivation, processing, distribution and dispensary activities. State and local governmental authorities and regulated cannabis businesses have taken additional measures to ensure the safety and well-being of employees, patients and consumers, including but not limited to restrictions associated with social distancing requirements and additional levels of protection for medical cannabis patients with more vulnerability to health complications with COVID-19.

Portfolio Update and Acquisition Activity

Portfolio Update

IIP acquired the following properties and made the following additional funds available to tenants for improvements at IIP’s properties during the period from January 1, 2020 through May 6, 2020 (dollars in thousands):

 

As of May 6, 2020, IIP owned 55 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New York, Nevada, North Dakota, Ohio, Pennsylvania and Virginia, totaling approximately 4.1 million rentable square feet (including approximately 1.3 million rentable square feet under development/redevelopment), which were 99.1% leased (based on square footage) with a weighted-average remaining lease term of approximately 15.9 years. As of May 6, 2020, IIP had invested approximately $719.7 million in the aggregate (excluding transaction costs) and had committed an additional approximately $143.2 million to reimburse certain tenants and sellers for completion of construction and tenant improvements at IIP’s properties. These statistics do not include up to approximately $10.7 million that may be funded in the future pursuant to IIP’s lease with a tenant at one of IIP’s Illinois properties, or approximately $23.8 million that may be funded in the future pursuant to IIP’s lease with a tenant at one of IIP’s Massachusetts properties, as the tenants at those properties may not elect to have IIP disburse those funds to them and pay IIP the corresponding base rent on those funds. These statistics also treat IIP’s Los Angeles, California property as not leased, due to the tenant being in receivership and its ongoing default in its obligation to pay rent at that location.

Financing Activity

In January, IIP completed an underwritten public offering of 3,412,969 shares of common stock, including the exercise in full of the underwriters’ option to purchase an additional 445,170 shares, resulting in net proceeds of approximately $239.6 million.

In January, IIP issued shares of common stock for net proceeds of approximately $78.2 million under an “at-the-market” equity offering program.

IIP expects to use the net proceeds from these offerings to invest in specialized industrial real estate assets that support the regulated medical-use cannabis cultivation and processing industry and for general corporate purposes.

Financial Results

IIP generated total revenues of approximately $21.1 million for the three months ended March 31, 2020, compared to approximately $6.8 million for the same period in 2019, an increase of 210%. The increase was driven primarily by the acquisition and leasing of new properties, in addition to contractual rental escalations at certain properties. Total revenues for the three months ended March 31, 2020 also included approximately $422,000 of tenant reimbursements, rent collected and associated lease penalties through the drawdown of the security deposit at our Los Angeles, California property, as a result of the tenant’s ongoing lease default, and the drawdown of part of the security deposits totaling approximately $195,000 at certain properties in southern California leased to Vertical to pay part of the rent and associated lease penalties for March.

For the three months ended March 31, 2020, IIP recorded net income available to common stockholders and net income available to common stockholders per diluted share of approximately $11.5 million and $0.72, respectively; funds from operations (“FFO”) and FFO per diluted share of approximately $16.4 million and $1.03, respectively; and AFFO and AFFO per diluted share of approximately $17.8 million and $1.12, respectively. First quarter 2020 AFFO and AFFO per diluted share for the quarter increased by 236% and 107% from the prior year period, respectively.

FFO and AFFO are supplemental non-GAAP financial measures used in the real estate industry to measure and compare the operating performance of real estate companies. A complete reconciliation containing adjustments from GAAP net income available to common stockholders to FFO and AFFO and definitions of terms are included at the end of this release.

Teleconference and Webcast

Innovative Industrial Properties, Inc. will conduct a conference call and webcast at 10:00 a.m. Pacific Time (1:00 p.m. Eastern Time) on Thursday, May 7, 2020 to discuss IIP’s financial results and operations for the first quarter ended March 31, 2020. The call will be open to all interested investors through a live audio webcast at the Investor Relations section of IIP’s website at www.innovativeindustrialproperties.com, or live by calling 1-877-328-5514 (domestic) or 1-412-902-6764 (international) and asking to be joined to the Innovative Industrial Properties, Inc. conference call. The complete webcast will be archived for 90 days on IIP’s website. A telephone playback of the conference call will also be available from 12:00 p.m. Pacific Time on Thursday, May 7, 2020 until 12:00 p.m. Pacific Time on Thursday, May 14, 2020, by calling 1-877-344-7529 (domestic), 855-669-9658 (Canada) or 1-412-317-0088 (international) and using access code 10143382.

About Innovative Industrial Properties

Innovative Industrial Properties, Inc. is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities. Innovative Industrial Properties, Inc. has elected to be taxed as a real estate investment trust, commencing with the year ended December 31, 2017. Additional information is available at www.innovativeindustrialproperties.com.

FFO and FFO per share are operating performance measures adopted by the National Association of Real Estate Investment Trusts, Inc. (NAREIT). NAREIT defines FFO as the most commonly accepted and reported measure of a REIT’s operating performance equal to “net income, computed in accordance with accounting principles generally accepted in the United States (GAAP), excluding gains (or losses) from sales of property, plus depreciation, amortization and impairment related to real estate properties, and after adjustments for unconsolidated partnerships and joint ventures.”

Management believes that net income, as defined by GAAP, is the most appropriate earnings measurement. However, management believes FFO and FFO per share to be important supplemental measures of a REIT’s performance because they provide an understanding of the operating performance of IIP’s properties without giving effect to certain significant non-cash items, primarily depreciation expense. Historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time. However, real estate values instead have historically risen or fallen with market conditions. IIP believes that by excluding the effect of depreciation, FFO and FFO per share can facilitate comparisons of operating performance between periods. FFO and FFO per share are used by management to evaluate the REIT’s operating performance and these measures are the predominant measures used by the REIT industry and industry analysts to evaluate REITs. For these reasons, management has deemed it appropriate to disclose and discuss FFO and FFO per share.

Management believes that AFFO and AFFO per share are also appropriate supplemental measures of a REIT’s operating performance. IIP calculates AFFO by adding to FFO certain non-cash and infrequent or unpredictable expenses which may impact comparability, consisting of non-cash stock-based compensation expense and non-cash interest expense.

IIP’s computation of FFO and AFFO may differ from the methodology for calculating FFO and AFFO utilized by other equity REITs and, accordingly, may not be comparable to such REITs. Further, FFO and AFFO do not represent cash flow available for management’s discretionary use. FFO and AFFO should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of IIP’s financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of IIP’s liquidity, nor is it indicative of funds available to fund IIP’s cash needs, including IIP’s ability to pay dividends or make distributions. FFO and AFFO should be considered only as supplements to net income computed in accordance with GAAP as measures of IIP’s operations.

Original press release

May 03, 2020
 

The Public Cannabis Company Revenue & Income Tracker, managed by New Cannabis Ventures, ranks the top revenue producing cannabis stocks that generate industry sales of more than US$7.5 million per quarter (C$10.5 million). This data-driven, fact-based tracker will continually update based on new financial filings so that readers can stay up to date. Companies must file with the SEC or SEDAR to be considered for inclusion. Please note that we raised the minimum quarterly revenue in May 2019 from US$2.5 million and from US$5.0 million in October 2019.

44 companies currently qualify for inclusion, with 27 filing in U.S dollars and 17 in the Canadian currency, which is the same as when we reported in mid-April. Several companies that had been expected to report by the end of April have taken advantage of an extended deadline to accommodate delays due to the COVID-19 crisis, including six that report in U.S. dollars and one that files in Canadian dollars. We expect some delays in Q1 reporting as well.

In May 2019, we added an additional metric, “Adjusted Operating Income”, as we detailed in our newsletter. The calculation takes the reported operating income and adjusts it for any changes in the fair value of biological assets required under IFRS accounting. We believe that this adjustment improves comparability for the companies across IFRS and GAAP accounting. We note that often operating income can include one-time items like stock compensation, inventory write-downs or public listing expenses, and we recommend that readers understand how these non-cash items can impact quarterly financials. Many companies are moving from IFRS to U.S. GAAP accounting, which will reduce our need to make adjustments.

One trend we have observed is that many of the companies are now providing pro forma revenue as well, which is an attempt to more accurately portray the operations by taking into account the results of closed and pending acquisitions as the multi-state operator (MSO) space rapidly consolidates. Our rankings include only actual reported revenue.

For companies that report in U.S. dollars, Cresco Labs (CSE: CL) (OTC: CRLBF) saw revenue increase 14% sequentially to $41.4 million. The company, which closed the acquisition of Origin House in January, also pre-announced Q1 revenue at $66.5 million.

American Dollar Reporting – Public Cannabis Company Revenue Tracker

Several companies will be reporting results for the March quarter in the first half of May, including GW Pharma (NASDAQ: GWPH), Green Thumb Industries (CSE: GTII) (OTC: GTBIF), Tilray (NASDAQ: TLRY), GrowGeneration (NASDAQ: GRWG), Charlotte’s Web (TSX: CWEB) (OTC: CWBHF), Innovative Industrial Properties (NYSE: IIPR), cbdMD (NYSE American: YCBD) and CV Sciences (OTC: CVSI), all of which report their Q1 results with the exception of cbdMD, which will be reporting its fiscal Q2 financials.

GW Pharma, according to Sentieo, is expected to have generated revenue of $108 million, down 1% from Q4 but up about 175% from a year ago. Analyst forecasts range from $95 million to $112 million. The company discussed seasonal factors that weigh upon Q1 on its conference call in February. The company reports on May 11th.

GTI, which reports on May 14th, is expected to increase revenue by 22% compared to Q4 to $92.1 million, which would be 230% above year-ago sales. Q1 includes the first sales of adult-use cannabis in Illinois. The company guided in late March for revenue to increase 20-25% sequentially.

Tilray and GrowGeneration haven’t yet scheduled earnings calls. Tilray is expected to see overall revenue increase 8% to $50.6 million. The company generates most of its revenue from its Canadian LP operations, but it also includes sales of hemp food products and a small amount of CBD sales in the U.S. GrowGeneration, which guided for full-year revenue of $130-135 million and Q1 at $$31.5-32.5 million when it reported Q4 on March 30th, is expected by analysts to have generated $31.6 million revenue in Q1, up 24% sequentially. Analysts also project EPS of $0.03.

Charlotte’s Web is expected to see a sequential decline in revenue to $20.8 million, which would represent -4% growth from a year ago. On March 24th, when it released Q4 financials, it guided to revenue of about $20 million. For the full year, the company projected revenue growth of 10-20% above 2019 revenue of $94.6 million.

Innovative Industrial Properties will report on May 6th after the close and host a call on the 7th. Analysts expect revenue to increase 21% from Q4 to $21.4 million. This would represent 214% growth from a year ago. The company has raised a substantial amount of capital over the past two quarters, which has increased the share count and will dampen EPS growth in the near-term. Analysts project Q1 EPS will decline by 4% from Q4 to $0.75, which represents 127% growth from a year ago.

CBD marketer cbdMD is expected to have generated $11.3 million revenue in its fiscal Q2, up 12% from Q1 and 100% from a year ago. Peer CV Sciences, which guided for Q1 revenue of $6-8 million, is projected to have generated $6.5 million a decline of 30% from Q4 and 56% from a year ago. The company has scheduled a call for May 8th.

Among the companies that haven’t yet filed Q4 financials, TILT Holdings (CSE: TILT) (OTC: TILTF), which hasn’t yet announced the date, is projected to have generated $47 million in revenue, up 2% from Q3 as the company was likely impacted during the quarter by the vaping crisis. Vireo Health (CSE: VREO) (OTC: VREOF), which will host a call on May 14th to discuss its Q4 results, is projected by analysts to have generated $8.9 million, up 11% from Q3.

For many of these companies, we publish comprehensive earnings previews for subscribers at 420 Investor.

Of the companies that report in Canadian dollars, TerrAscend (CSE: TER) (OTC: TRSSF) experienced strong growth in its U.S. operations, which represented 93% of revenue, but saw a decline in its Canadian operations due to a write-down of inventory, with overall revenue falling 3% from Q3 but increasing 414% from the prior year on the back of acquisitions in California and Pennsylvania. The company guided to Q1 revenue of C$35 million. Fire & Flower (TSX: FAF) (OTC: FFLWF) beat analyst expectations as it wrapped up its fiscal year, with revenue growing 23% sequentially to C$16.8 million.


Canadian Dollar Reporting – Public Cannabis Company Revenue Tracker

During the first half of May, we will receive updates from Aurora Cannabis (TSX: ACB) (NYSE: ACB), MediPharm Labs (TSX: LABS) (OTC: MEDIF). Sundial Growers (NASDAQ: SNDL), Alcanna (TSX: CLIQ) (OTC: LQSIF), Zenabis (TSX: ZENA) (OTC: ZBISF) and Delta 9 Cannabis (TSX: DN) (OTC: VRNDF), all of which are reporting their Q1 financials except for Aurora Cannabis, which will be detailing its fiscal Q3 results.

Aurora Cannabis is expected, according to Sentieo, to see revenue rise 18% from fiscal Q2 to C$66.2 million, which would be up just slightly from a year ago. The company, which has scheduled its call for May 14th, reaffirmed prior guidance on April 13th that its revenue will show “modest growth” relative to fiscal Q2, suggesting that the consensus may be too aggressive.

MediPharm Labs is expected to see its second consecutive sequential quarterly decline in revenue, with analysts projecting revenue of C$24.6 million, which would represent 12% growth from a year ago. Sundial, which has scheduled a call for May 14th, is expected to report overall revenue of $22.4 million, up modestly from Q4. The company generates substantial non-cannabis revenue. The vast majority of Alcanna’s revenue is from the sale of alcohol, and its Q1 revenue is expected to be $163 million, up 9% from a year ago.

Meta Growth is expected to have generated revenue of C$14.5 million for its fiscal Q2 ending in February, a decline sequentially from its fiscal Q1.

For many of these companies, we publish comprehensive earnings previews for subscribers at 420 Investor.

Visit the Public Cannabis Company Revenue Tracker to track and explore the complete list of qualifying companies. We have recently created a way for our readers to access our library of Revenue Tracker articles. For our readers who are interested in staying on top of scheduled earnings calls in the sector, we have have created and continually update the Cannabis Investor Earnings Conference Call Calendar.

April 30, 2020
 

Canadian licensed producers finally broke a twelve-month streak of monthly declines during April, with the Canadian Cannabis LP Index rising 7.6% to 265.65, slightly lagging the S&P/TSX Composite, which rose 10.5%:

Over the past year, the index has declined 75.5%:

The index remains substantially below the all-time closing high of 1314.33 in September 2018, just ahead of Canadian legalization. In March, it posted a new 52-week closing low of 196.10, a level not seen since late 2016, and it closed 35.5% above that level. The index has declined 32.5% from its close of 393.78 at the end of 2019:

The index, which included 32 publicly-traded licensed producers that traded in Canada at the end of March, with equal weighting, is rebalanced monthly. Each of the members is also included in a sub-index, with 9 in the Canadian Cannabis LP Tier 1 Index, 9 in the Canadian Cannabis LP Tier 2 Index and 14 in the Canadian Cannabis LP Tier 3 Index during the month. Please note that at the end of 2019 we began excluding companies with a price below C$0.20 unless they generate quarterly industry revenue in excess of C$1 million. There are currently almost two dozen publicly traded LPs that fail to qualify.

Tier 1

Tier 1, which included the LPs that are generating cannabis-related sales of at least C$10 million per quarter (in 2018, we used C$4 million as the hurdle), declined during the month, falling 5.7% to 371.95, which followed a 2019 decline of 38.5%, when it ended the year at 642.23. Tier 1 has declined 42.1% so far this year. This group included Aphria (TSX: APHA) (NYSE: APHA), Aurora Cannabis (TSX: ACB) (NYSE: ACB), Canopy Growth (TSX: WEED) (NYSE: CGC), Cronos Group (TSX: CRON) (NASDAQ: CRON), HEXO Corp (TSX: HEXO) (NYSE American: HEXO), MediPharm Labs (TSX: LABS) (OTC: MEDIF), Organigram (TSXV: OGI) (NASDAQ: OGI), Radient Technologies (TSXV: RTI) (OTC: RDDTF)  and Valens Company (TSXV: VGW) (CSE: VGWCF). HEXO, Organigram and Aurora Cananbis all declined by more than 19%, while MediPharm Labs and Aphria were the only double-digit gainers.

Tier 2

Tier 2, which included the LPs that generate cannabis-related quarterly sales between C$2.5 million and C$10 million, posted a positive return but lagged the overall market, rising 1.4% to 410.58. In 2019, it lost 44.3% in 2019 after closing at 569.54 and is down 27.9% in 2020. This group included Aleafia Health (TSX: ALEF) (OTC: ALEAF), Delta 9 (TSXV: DN) (OTC: VNRDF), Emerald Health (TSXV: EMH) (OTC: EMHTF), Heritage Cannabis (CSE: CANN) (OTC: HERTF), Supreme Cannabis (TSX: FIRE) (OTC: SPRWF), TerrAscend (CSE: TER) (OTC: TRSSF), VIVO Cannabis (TSX: VIVO) (OTC: VVCIF), WeedMD (TSXV: WMD) (OTC: WDDMF) and Zenabis Global (TSX: ZENA) (OTC: ZBISF). Aleafia and TerrAscend posted double-digit gains, while Zenabis, Emerald Health and WeedMD posted double-digit declines.

Tier 3

Tier 3, which included the 14 qualifying LPs that generate cannabis-related quarterly sales less than C$2.5 million, soared 20.1% as it closed at 70.06. It ended at 96.76 in 2019, declining 45.0%, and is down 27.6% in 2020. Indiva (TSXV: NDVA) (OTC: NDVAF), Neptune (TSX: NEPT) (NASDAQ: NEPT and GTEC Cannabis (TSXV: GTEC) (OTC: GGTTF) all rallied by more than 50%, while just one name fell by more than 20%.

The returns for the overall sector varied greatly, with 12 names posting double-digit gains, while 11 declined by more than 10%, with the entire group posting a median return of 2.5%, well below the 7.6% average return:

For May, the overall index will have 35 constituents, as we have added CannTab (CSE: PILL) (OTC:CTABF),  Rapid Dose Therapeutics (CSE: DOSE) (OTC) (RDTCF ) and RMMI (CSE: RMMI), all of which join Tier 3.  Additionally, Cronos Group has moved from Tier 1 to Tier 2 and TerrAscend from Tier 2 to Tier 3, while Zenabis has moved to Tier 2 from Tier 1.

In the next monthly review, we will summarize the performance for May and discuss any additions or deletions. Be sure to bookmark the pages to stay current on LP stock price movements within the day or from day-to-day.

April 27, 2020
 

Visit the Cresco Labs Investor Dashboard and stay up to date with data-driven, fact based due diligence for active traders and investors.

Cresco Labs Announces Record Fourth Quarter & Full Year 2019 Results With Revenue Growth of 144% Year-over-Year and 14% Quarter-Over-Quarter and Pre-Announces First Quarter 2020 Revenue

Conference Call with Investors and Analysts to be Held at 5:00 p.m. Eastern Time Today

CHICAGO, April 27, 2020–(BUSINESS WIRE)–Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF) (FSE: 6CQ) (“Cresco” or the “Company”) one of the largest vertically integrated multistate cannabis operators in the United States, today released its unaudited financial results for the fourth quarter ending December 31, 2019. All financial information presented in this release is in U.S. dollars, unless otherwise noted.

Management Commentary

 2019 was a pivotal year for Cresco, as we achieved several major milestones that will have a profound impact on the future success of both our organization and the industry. Throughout the year, we diligently executed the plan laid out for shareholders, delivering strong financial and operational performance and setting the foundation for profitable growth in 2020.

Charlie Bachtell, Co-founder and CEO of Cresco Labs

We have continued to act as stewards of this industry, successfully leading efforts that resulted in the passage of adult-use legislation in Illinois, and worked side by side with our state administrations to help cannabis achieve ‘essential’ status amid the COVID-19 pandemic.

Mr. Bachtell continued, “Backed by a strong balance sheet and a world-class leadership team, I am confident in our ability to manage through the current COVID-19 crisis and know that we will emerge from it as a stronger, more profitable company. Our vision is to be the most important company in this industry, while generating sustainable, industry-leading returns on invested capital. Based on evidence from other mature consumer product industries, the highest long-term returns will go to companies that: have a strategic geographic footprint; are dominant players in their chosen markets; own a durable and differentiated brand portfolio; and have the distribution expertise and infrastructure to get those brands onto third-party shelves efficiently. This is Cresco’s strategy. The success we have had in Illinois and Pennsylvania already has proven that we are following the right plan – going deep and focusing on getting our brand portfolio onto third-party shelves. Building on our success last year, in 2020 we are focused on: expanding our market-leading position in Illinois and Pennsylvania; integrating our newest assets and turning California into a center of profitable growth; and building a scalable foundation in other important states. By achieving success in these focus areas, we expect to transition the Company from Adjusted EBITDA positive to cashflow positive progressively through the year.”

Financial Highlights and Subsequent Events

Revenue

  • Fourth quarter 2019, revenue of $41.4 million, up 144% year-over-year and 14% quarter-over-quarter.
  • Total 2019, revenue of $128.5 million, up 197% year-over-year.
  • Fourth quarter 2019, pro forma revenue¹ of $56.0 million, which includes CannaRoyalty Corp. d.b.a. Origin House and minority investments.
  • First quarter 2020, estimated revenue of $66.5 million, up 216% year-over-year and 61% quarter-over-quarter.

Adjusted EBITDA

  • Fourth quarter 2019, Adjusted EBITDA², excluding the impact of biological assets, of $2.9 million compared to $(0.3) million in the prior-year period.

Net (Loss) Income

  • Fourth quarter net loss³ of $45.2 million compared to net loss of $4.4 million in the prior-year period.
  • Fourth quarter 2019 financial results included acquisition and other non-core costs of $7.2 million, $4.1 million related to share-based incentive compensation, $3.4 million in expansion, relaunch and rebranding costs and $1.3 million fair value mark-up on acquired inventory.

Balance Sheet

  • As of December 31, 2019, the Company had total assets of $616.6 million, including cash and cash equivalents of $49.1 million.

Capital Markets

  • On December 12, 2019, the Company announced the closing of a sale-and-leaseback agreement for its Lincoln, Illinois cultivation facility to GreenAcreage Real Estate Corp. for $50 million.
  • On January 8, 2020, the Company announced the closing of its acquisition of Origin House, which provides Cresco with substantial California wholesale distribution and a premium indoor cultivation footprint. Prior to the closing of the transaction, Origin House completed a non-brokered financing for aggregate gross proceeds of C$39.7 million (approximately US$30 million) to strengthen the balance sheet of the combined company.
  • On January 28, 2020, the Company announced the closing of a sale-and-leaseback agreement for its Yellow Springs, Ohio property for total non-dilutive funding of $12 million.
  • On February 2, 2020, the Company announced the closing of a non-brokered credit agreement for a senior secured term loan in an initial aggregate principal amount of $100 million, with a mutual option to increase the size of the facility to a maximum of $200 million.
  • On February 7, 2020, the Company announced the legal close and cash funding for its acquisition of Hope Heal Health, Inc. (“HHH”) after receiving regulatory approval for change in ownership. The legal close of Cresco’s acquisition coincided with the launch of recreational cannabis sales at the HHH dispensary.
  • On April 23, 2020, the Company announced the closing of a sale-and-leaseback agreement for its Marshall, Michigan property for total non-dilutive funding of $16 million.
  • On April 27, 2020, the Company announced the termination of the purchase agreement to purchase all outstanding equity of Tryke Companies, LLC as its capital allocation strategy has adapted given several recent changing dynamics.

Operations

  • On November 6, 2019, the Company announced the launch of its industry-defining Community Impact Incubator Program, part of its SEED initiative.
  • On December 17, 2019, the Company announced that it won the U.S. Cannabis Company Game Changer Award at the inaugural MJBizDaily Awards in Las Vegas, which recognized the organization that displayed excellence and the greatest impact in the U.S. cannabis industry.
  • On December 30, 2019, the Company announced the opening of its first five Sunnyside branded dispensaries in Lakeview, Elmwood Park, Champaign, Buffalo Grove and Rockford, IL.
  • On January 1, 2020, the Company announced the first sale under Illinois new adult-use cannabis legislation at its Sunnyside Lakeview dispensary. Among the first customers were two participants of Cresco’s SEED initiative and Illinois Lt. Gov. Juliana Stratton.
  • On February 27, 2020, the Company announced the conversion of four dispensaries to Cresco’s nationwide retail brand, Sunnyside, in the Williamsburg neighborhood in Brooklyn, Huntington Station, New Hartford and Bardonia, NY. In addition, it launched a home delivery service for medical cannabis patients in the New Hartford area of New York.
  • On April 6, 2020, the Company announced that it had been granted final approval to open the first adult-use dispensary in downtown Chicago.
  • On April 8, 2020, the Company announced additions to its senior leadership teams, Cresco continues to build on its industry-leading management team with additions that have deep financial industry roots from both top CPG companies and from traditional industries that have experienced rapid growth.

COVID – 19

  • On March 19, 2020, the Company provided an update on its response to COVID-19. The Company continues to operate all of its dispensaries with expanded hours using curbside pickup, online ordering, and delivery to ensure social distancing.
  • On April 13, 2020, the Company announced an initiative to expand local hiring of workers displaced by COVID-19. In addition, the Company announced it is providing free meals to employees to ensure employee wellness and safety, as well as to support local restaurants.

Financial Results for the Fourth Quarter Ended December 31, 2019 (Unaudited)

Revenue for the fourth quarter of 2019 was $41.4 million, an increase of 144% compared to revenue of $17.0 million for the fourth quarter of 2018. The increase in revenue was driven by expansion into new markets and continued growth in the states where the Company operates. Fourth quarter 2019 revenue increased 14% compared to $36.2 million for the third quarter of 2019, primarily driven by higher revenue generated in Pennsylvania, Illinois and Arizona as well as the additional revenue from its Valley Ag and HHH acquisitions which are included in the Company’s results starting in October 2019. On a pro forma basis, revenue for the fourth quarter of 2019 increased incrementally from the third quarter of 2019 to $56.0 million, which includes the impact of pending acquisitions and minority investments.

Operational gross profit4, before the impact of biological assets accounting was $21.2 million, or 51% of revenues, an increase of 176% compared to operational gross profit of $7.7 million, or 45% of revenues, for the fourth quarter of 2018. Fourth quarter 2019 operational gross profit increased 24% compared to $17.1 million, or 47% of revenues, for the third quarter of 2019. The change in operational gross profit margin was driven by increased sales and operational efficiencies in the Company’s established markets offset by the impact of emerging and recently acquired businesses where the Company is focused on footprint expansion and relaunching of Cresco-branded products. The Company expects to see higher margins in these developing markets as operations continue to scale.

Total expenses for the fourth quarter of 2019 were $33.5 million, compared to $18.6 million for the prior-year period. Total expenses in the fourth quarter of 2019 included $7.2 million in acquisition and other non-core costs, $4.2 million in expenses related to share-based incentive compensation and $1.4 million of depreciation and amortization. The balance of the increase represents investments made in talent and operational infrastructure to support the Company’s continued revenue growth.

Net loss for the fourth quarter for 2019 was $45.2 million, compared to net loss of $4.4 million for the prior-year period. Current period net loss included income tax expense of $4.3 million.

Adjusted EBITDA, excluding the net impact of the fair value of biological assets, for the fourth quarter of 2019 was $2.9 million compared with $(0.3) million for the prior-year period.

Balance Sheet and Liquidity

As of December 31, 2019, the Company had total assets of $616.6 million, including cash and cash equivalents of $49.1 million. Use of cash in the fourth quarter of 2019 included significant investments in the expansion of cultivation, processing and retail facilities in the Company’s existing markets as well as funding provided for our current and pending acquisitions.

Total shares on a fully converted and diluted basis5 were 307,729,000 as of December 31, 2019.

Conference Call and Webcast

The Company will hold a conference call and webcast to discuss its financial results and provide investors with key business highlights on Monday, April 27, 2020 at 5pm Eastern Time (4pm Central Time). The conference call may be accessed via webcast or by dialing 866-688-4235 (409-216-0711 for international callers) and entering conference ID 8155158. Archived access to the webcast will be available for one year on Cresco’s investor relations website.

Consolidated Financial Statements

The financial information reported in this news release is based on unaudited management prepared financial statements for the three months and year ended December 31, 2019. The Company will file its consolidated financial statements on SEDAR by April 29, 2020. Accordingly, such financial information may be subject to change. All financial information contained in this news release is qualified in its entirety with reference to such financial statements. While the Company does not expect there to be any material changes, to the extent that the financial information contained in this news release is inconsistent with the information contained in the Company’s financial statements, the financial information contained in this news release shall be deemed to be modified or superseded by the Company’s financial statements. The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation for purposes of applicable securities laws. Further, the reader should refer to the additional disclosures in the Company’s audited financial statements for the year ended December 31, 2018, previously filed on SEDAR.

Cresco references certain non-IFRS financial measures throughout this press release, which may not be comparable to similar measures presented by other issuers. Please see the “Non-IFRS Financial Measures” section at the end of this press release for more detailed information.

About Cresco Labs Inc.

Cresco Labs is one of the largest vertically-integrated multi-state cannabis operators in the United States. Cresco is built to become the most important company in the cannabis industry by combining the most strategic geographic footprint with one of the leading distribution platforms in North America. Employing a consumer-packaged goods (“CPG”) approach to cannabis, Cresco’s house of brands is designed to meet the needs of all consumer segments and includes some of the most recognized and trusted national brands including Cresco, Remedi and Mindy’s, a line of edibles created by James Beard Award-winning chef Mindy Segal. Sunnyside, Cresco’s national dispensary brand, is a wellness-focused retailer designed to build trust, education and convenience for both existing and new cannabis consumers. Recognizing that the cannabis industry is poised to become one of the leading job creators in the country, Cresco has launched the industry’s first national comprehensive Social Equity and Educational Development (SEED) initiative designed to ensure that all members of society have the skills, knowledge and opportunity to work in and own businesses in the cannabis industry. Learn more about Cresco Labs at www.crescolabs.com.

Non-IFRS Financial Measures

Operational gross profit, EBITDA and Adjusted EBITDA are non-IFRS measures and do not have standardized definitions under IFRS. The following information provides reconciliations of the supplemental non-IFRS financial measures, presented herein to the most directly comparable financial measures calculated and presented in accordance with IFRS. The Company has also provided unaudited pro forma financial information, which assumes that closed and pending mergers and acquisitions in 2019 are included in the Company’s financial results as of the beginning of the quarterly and annual periods in 2019. This measure also includes revenue for certain pending or completed minority investments, for which revenue is not consolidated under IFRS rules. The Company has provided the non-IFRS financial measures, which are not calculated or presented in accordance with IFRS, as supplemental information and in addition to the financial measures that are calculated and presented in accordance with IFRS. These supplemental non-IFRS financial measures are presented because management has evaluated the financial results both including and excluding the adjusted items and believe that the supplemental non-IFRS financial measures presented provide additional perspective and insights when analyzing the core operating performance of the business. These supplemental non-IFRS financial measures should not be considered superior to, as a substitute for or as an alternative to, and should only be considered in conjunction with, the IFRS financial measures presented herein.

____________________

1 Pro forma revenue and comparative period reflect the results of acquisitions and minority investments closed and with definitive agreements as of the beginning of the year in which the closing or definitive agreement occurred.

2 See “Non-IFRS Financial Measures” at the end of this press release for more information regarding the Company’s use of non-IFRS financial measures.

3 Net (loss) income includes amounts attributable to non-controlling interests.

4 See “Non-IFRS Financial Measures” at the end of this press release for more information regarding the Company’s use of non-IFRS financial measures.

5 Total diluted share count is calculated using total outstanding subordinate voting shares, proportionate voting shares, redeemable LLC units, options, restricted stock units, warrants and contingent shares as of December 31, 2019. This share count does not include shares issuable in pending or future acquisitions.

Contacts
Media
Jason Erkes, Cresco Labs
Chief Communications Officer
press@crescolabs.com
312-953-2767

Investors
Aaron Miles, Cresco Labs
Vice President, Investor Relations
investors@crescolabs.com

For general Cresco Labs inquiries
312-929-0993
info@crescolabs.com

Original press release

April 26, 2020
 

You’re reading a copy of this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015. The newsletter includes unique insight to help our readers stay ahead of the curve as well as links to the week’s most important news.

Subscribe to receive our free weekly newsletter in your inbox each Sunday morning.

Friends,

As the American cannabis industry has begun to adjust to the new reality of operational challenges related to COVID-19 and an even tougher capital raising environment, most management teams have been focused internally as they attempt to reposition their operations, cut costs where they can, raise capital, if possible, and make tough decisions about their geographic footprint, which, for many companies, is just too broad given their limited resources. Several companies have announced plans to focus on a narrower set of assets, with Acreage Holdings and Harvest Health & Recreation, for example, exiting certain markets by shutting down operations.

Those companies with substantial debt and negative cash flow need to move very quickly. MedMen announced plans a few months ago to sell its assets in Arizona and Illinois, and it closed on the Illinois cultivation asset only thus far. iAnthus Capital, which defaulted on its debt obligations earlier this month, has apparently been shopping its assets.

We anticipate a wave of mergers and acquisitions ahead, but we believe the focus will be divestitures by multi-state operators (MSOs) rather than mergers of entire companies, which are challenging due to the complexity of regulations by state. Florida, for example, permits a company to own only one license, which would make acquiring MedMen or iAnthus difficult for any company already operating in the state. Nevada has locked down license transfers, making asset sales in that state very challenging, for now.

Looking at the largest publicly traded operators, all with market caps in excess of $1 billion, we believe they will be looking to selectively consolidate. Curaleaf has been aggressive to date on this front and is likely to participate in further industry consolidation. We recently asked Trulieve CEO Kim Rivers about the company’s potential to engage in M&A, and she told us that her team looked at more than 40 deals last year and passed, but the company continues to look for the right cultural fit and a deal that makes sense for it financially. Cresco Labs and Green Thumb Industries have suggested that they would look to add assets within their existing footprints. All of these companies have enjoyed good access to capital, including equity and debt as well as sale/leasebacks. There are also few SPACs that could step in as well.

Beyond the largest MSOs stepping in to buy selective assets, we think some others may look to swap assets in order to reduce their complexity and improve their profitability. For example, if two companies both have operations in Arizona and Pennsylvania, one might buy the Arizona operations from the other and sell them their Pennsylvania operations.

While reverse-mergers into small publicly traded cannabis operators hasn’t been a great strategy to date, this is something we think could gain interest. Over the past couple of years, 4Front Ventures merged into Cannex, and Green Growth Brands merged into Xanthic. More recently, we note that BR Brands announced such a transaction with its related-party, Dixie Brands. We are aware of several well-capitalized private MSOs, and there are a few smaller publicly traded companies that might serve as good merger partners that would allow them to go public.

We also expect new capital providers to step in. We shared recently the example of Indus Holdings selling control to investors at a deeply discounted price. “Deeply discounted price” is likely to be the theme ahead in general, as we expect the assets for sale to dwarf the potential buyers, at least in the near-term.

We suggest that investors in financially troubled cannabis companies factor in the current market conditions, which will press these companies with respect to the value they might receive. Further, cannabis deals are difficult to close in even normal times. Some of these companies may run out of time.

While distressed companies are facing many headwinds, the flip-side is that the better capitalized companies and investors are in a position to not only pick up bargains but also to likely face reduced competition in the future. While it’s not yet clear how this will play out exactly, one this is certain: The bankers who booked all the fees selling stock and debt over the past few years are in a position now to rake it in again on investment banking fees.


With the appointment of Jason Ackerman as CEO to lead its NYC-based senior management team, TerrAscend is progressing towards its goal of becoming a leading North American cannabis company. Today, the company is focused on a narrow geographic footprint that includes California and Utah in the West and Pennsylvania and New Jersey in the East along with Canada as well as a national hemp-derived product offering. TerrAscend is supported by Canopy Growth, which added to its equity investment with a C$80.5 million nine-year loan at 6.10% that was announced in March.


Get up to speed by visiting the TerrAscend Investor Dashboard that we maintain on their behalf as a client of New Cannabis Ventures. Click the blue Follow Company button in order to stay up to date with their progress.


New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:


To get real-time updates download our free mobile app for Android or Apple devices, like our Facebook page, or follow Alan on Twitter. Share and discover industry news with like-minded people on the largest cannabis investor and entrepreneur group on LinkedIn.

Get ahead of the crowd! If you are a cannabis investor and find value in our Sunday newsletters, subscribe to 420 Investor, Alan’s comprehensive stock due diligence platform since 2013. Gain immediate access to real-time and in-depth information and market intelligence about the publicly traded cannabis sector, including daily videos, weekly chats, model portfolios, a community forum and much more.

Use the suite of professionally managed NCV Cannabis Stock Indices to monitor the performance of publicly-traded cannabis companies within the day or over longer time-frames. In addition to the comprehensive Global Cannabis Stock Index, we offer a family of indices to track Canadian licensed producers as well as the American Cannabis Operator Index.

View the Public Cannabis Company Revenue & Income Tracker, which ranks the top revenue producing cannabis stocks that generate industry sales of more than US$7.5M per quarter.

Stay on top of some of the most important communications from public companies by viewing upcoming cannabis investor earnings conference calls.

Discover upcoming new listings with the curated Cannabis Stock IPOs and New Issues Tracker.

Sincerely,

Alan & Joel

April 20, 2020
 
There are more ways than one to celebrate 4/20. We’ve made a list of ideas to commemorate this special day while practicing safe social distancing.
April 19, 2020
 

You’re reading a copy of this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015. The newsletter includes unique insight to help our readers stay ahead of the curve as well as links to the week’s most important news.

Subscribe to receive our free weekly newsletter in your inbox each Sunday morning.

Friends,

As cannabis consumers and the industry prepare to celebrate the most challenging 4/20 imaginable tomorrow, it’s easy to get caught up in the negativity of the current moment. Beyond the extensive loss of lives, the threat to the welfare of all of us and the unimaginable rapid loss of so many jobs, our industry in particular has been waylaid by the health crisis.

We have written extensively over the past month of the intensification of the capital crunch, and this will continue to weigh upon the industry for quite some time. It has also become clear that legal cannabis consumption will be challenged by logistical barriers as well as legal ones, like Massachusetts shutting down the adult-use market.

Many of the positive drivers we had expected to emerge in the back half of the year will now be deferred. The Canadian cannabis market is in desperate need of a quick roll out of the newly legal products like vape pens and edibles as well as the opening of stores in Ontario, but both of these will be delayed. In the United States, the potential for several states to legalize through the legislative process has slipped away, for now.

Despite these setbacks, we are more optimistic than ever that legalization efforts will be successful when the crisis passes, as state governments will be looking to plug massive budget deficits and add jobs.

Another silver lining is that the pandemic has moved several states to liberalize how patients and consumers access their cannabis, permitting curbside pickup and delivery when these were previously not allowed. We think that these are likely to become permanent fixtures, a move that could help the legal cannabis industry gain an edge over the illicit market, which certainly has enjoyed the convenience advantage.

Finally, while it is certainly tragic for the many companies that won’t make it, we think that some of the largest cannabis operators will enjoy greater market share when we emerge from this downturn.


Leading cannabis ancillary operator KushCo Holdings announced a new strategic plan of getting to positive Adjusted EBITDA when they released their FY20-Q2 results on April 10th. According to the company, and following comprehensive restructuring activities, it will benefit from significantly lower revenue levels needed to achieve profitability. Since 2010, KushCo has sold more than 1 billion units across North America, South America, and Europe to legally operated medical and adult-use dispensaries, growers, brands, processors, and producers. Today, 80% of business is now driven by a more stable, predictable, creditworthy and financially stronger customer group.


Get up to speed by visiting the KushCo Holdings Investor Dashboard that we maintain on their behalf as a client of New Cannabis Ventures. Click the blue Follow Company button in order to stay up to date with their progress.


New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:


To get real-time updates download our free mobile app for Android or Apple devices, like our Facebook page, or follow Alan on Twitter. Share and discover industry news with like-minded people on the largest cannabis investor and entrepreneur group on LinkedIn.

Get ahead of the crowd! If you are a cannabis investor and find value in our Sunday newsletters, subscribe to 420 Investor, Alan’s comprehensive stock due diligence platform since 2013. Gain immediate access to real-time and in-depth information and market intelligence about the publicly traded cannabis sector, including daily videos, weekly chats, model portfolios, a community forum and much more.

Use the suite of professionally managed NCV Cannabis Stock Indices to monitor the performance of publicly-traded cannabis companies within the day or over longer time-frames. In addition to the comprehensive Global Cannabis Stock Index, we offer a family of indices to track Canadian licensed producers as well as the American Cannabis Operator Index.

View the Public Cannabis Company Revenue & Income Tracker, which ranks the top revenue producing cannabis stocks that generate industry sales of more than US$7.5M per quarter.

Stay on top of some of the most important communications from public companies by viewing upcoming cannabis investor earnings conference calls.

Discover upcoming new listings with the curated Cannabis Stock IPOs and New Issues Tracker.

Sincerely,

Alan & Joel

April 18, 2020
 

CannTrust (TSX: TRST) (NYSE: CTST), which has been suspended from trading since March 31st on both the Toronto Stock Exchange and the New York Stock Exchange after seeking protection from creditors, stated then that its shares would soon be delisted from both exchanges. On April 9th, the company disclosed that it will be delisted from the Toronto Stock Exchange at the close of business on May 6th. On Thursday, the New York Stock Exchange issued a Form 25 notifying that CannTrust will be delisted on the open of business on April 27th.

The NYSE indicated that CannTrust had the right to appeal its determination to delist its shares but failed to do so within ten business days of March 31st, when it notified the company by phone and mail of its intent.

Shares of CannTrust had declined 24% in 2020 as of March 31, when they closed at C$0.91, down 94% from its all-time high of C$15.50 in October 2018. Shares are unlikely to trade in the near-term in Canada, as the Ontario Securities Commission issued a cease trade order, though it is likely that shares may trade in the United States on the OTC. The company will be issuing a mandatory bi-weekly update on April 23rd.

April 14, 2020
 
The Valens Company Reports Record Revenue And Profitable First Quarter Of Fiscal 2020

KELOWNA, BC, April 14, 2020 /PRNewswire/ – Valens GroWorks Corp. (TSXV: VLNS) (OTCQX: VLNCF) (the “Company”, “Valens” or “The Valens Company”), a global leader in the end-to-end development and manufacturing of innovative, cannabinoid-based products, is pleased to report its financial results for its first quarter, for the period ended February 29, 2020.

Key Financial Highlights of the First Quarter of 2020

  • Revenue for the first quarter of 2020 increased to $32.0 million, a significant increase from $2.2 million in the first quarter of 2019.
  • Revenue of $1.44 per gram of input in the first quarter of 2020, compared to $1.25 per gram of input in the fourth quarter of 2019.
  • Gross profit increased to $18.1 million, or 56.6% of revenue, compared to $0.9 million, or 38.3% of revenue, in the first quarter of 2019.
  • Adjusted EBITDA(1) was $14.3 million or 44.7% of revenue, for the first quarter of 2020, compared to negative adjusted EBITDA(1) of ($2.0 million) in the first quarter of 2019.
  • Strong balance sheet with $44.3 million in cash and short-term investments and a net working capital position of $80.4 million as of February 29, 2020.

Corporate Highlights

  • The Company announced its corporate rebranding to ‘The Valens Company’, to further solidify its position as a global leader in the end-to-end development and manufacturing of cannabinoid-based products and better reflect the strategic vision of the business.
  • To align with the rebranding, the Company’s ticker symbol on the TSX Venture Exchange (“TSXV”) changed to ‘VLNS’ and its ticker symbol on the OTCQX changed to ‘VLNCF’.
  • The Valens Company also obtained eligibility from the Depository Trust Company (“DTC”) for its shares traded on the OTCQX, under the symbol ‘VLNCF’.
  • The Company received approval from the TSXV for its notice of intention to make a normal course issuer bid which allows the Company, over the 12 months from approval, to acquire up to 6,275,204 of its common shares in open market purchases. There are 127,709,952 common shares outstanding as of February 29, 2020.
  • Subsequent to the quarter end, the Company received conditional approval from the Toronto Stock Exchange (“TSX”) to up list from the TSXV to the TSX. The Valens Company has since received final approval to list its common shares on the TSX and will officially commence trading at the opening of the markets on April 16, 2020, under the trading symbol “VLNS.”

“The first quarter of fiscal 2020 was pivotal for The Valens Company as we hit many milestones, including posting continued quarter-over-quarter revenue growth and having oil-based cannabis 2.0 products hit the shelves in Canada amidst a challenging market backdrop. Throughout the quarter, we leveraged the flexibility of our extraction platform to help our customers navigate increasing market complexity while at the same time accelerating the scale-up of our white label capabilities. These efforts included launching a number of new product formats such as hydrocarbon-based offerings with the intention of bringing these high-demand products to customers at the beginning of the third quarter,” said Tyler Robson, CEO of The Valens Company. “In total, we saw a moderation in extraction volumes in the quarter as our customers continued to shift to smaller processing lots as a result of the slower roll-out of Cannabis 2.0 products in the broader market.”

Looking forward, we are starting to see some encouraging signs with respect to a return to larger extraction volumes into the back half of fiscal 2020. The first quarter also saw an increase in our revenue per gram of input which is directly related to our white label strategy and we expect this number to continue to increase throughout 2020 as this segment makes up a larger part of our revenue and overall business.

Tyler Robson, CEO of The Valens Company

This was the motivation for our rebrand to The Valens Company which represents much more than just a corporate name change, it signifies the evolution of our business into a leading cannabinoid-based product development and manufacturing company positioned to capitalize on the evolving industry on a global scale.

“At this unprecedented time under the COVID-19 pandemic, we have taken a number of steps to ensure that the health and safety of our employees remains our top priority. Collectively, as a society, we are doing our best to navigate the uncertainty, and now more than ever, we are committed to remaining a trusted partner to our customers, consumers and communities as we work to support them as much as possible despite the challenging conditions,” concluded Mr. Robson.

Key Operating Highlights of the First Quarter 2020

  • 19,962 kilograms of dried cannabis and hemp biomass was processed in the first quarter of 2020. During the quarter, Valens worked with a number of its clients to process white label products in preparation for the launch of edibles and concentrates for Cannabis 2.0. As a result, revenue-per-gram of input increased to $1.44/gram in the first quarter of 2020, compared to $1.25/gram in the fourth quarter of 2019 and $0.61/gram in the third quarter of 2019. Revenue-per-gram is expected to continue to increase throughout 2020 as product development and white label contracts continue to grow in number, and revenue from extraction contracts contributes to a lesser proportion of total revenue.
  • The Company has 25 SKUs across 5 different product lines in its development pipeline and expects this to continue to grow throughout 2020 to meet demand from its customers for Cannabis 2.0 products, including vape pens, edibles, concentrates, cannabis-infused beverages, topicals, tinctures, and capsules.
  • The Company announced a four-year extraction and white label agreement with Emerald Health Therapeutics Inc. with annual minimum quantities of 10,000 kilograms.
  • The Company entered an amended manufacturing and sales licence agreement with SōRSE Technology Corporation (“SōRSE”) which grants Valens an exclusive licence to use the proprietary SōRSE emulsion technology to produce, market, package, sell and distribute cannabis infused products in Canada, the United Kingdom, Europe, Australia and Mexico.
  • The Company entered into multi-year distillate and SōRSE emulsion supply agreement with large-scale confectionary company, Dynaleo Inc.
  • The Company also announced receipt of its first international purchase orders of white label products to customers in Australia. Based on the purchase orders received, the initial shipments will consist of three SKUs of tinctures, totaling over 3,000 units, and are expected to be shipped in the coming months, pending receipt of necessary import and export permits.
  • Valens entered into a multi-year manufacturing agreement with a Health Canada licensed party that provides the Company with additional licensed capacity to demand for white-label product development services. Under the terms of the agreement, an initial cGMP certified 5,000 square feet has been allocated to Valens operations with a total of up to 50,000 square feet being made available subject to the counter-party receiving the required Health Canada licence amendment.
  • Subsequent to the quarter end, the Company launched a line of cannabis-infused beverages, produced under a white label agreement with A1 Cannabis Company (a subsidiary of Iconic Brewing). The new line of beverages includes BASECAMP, a CBD-forward iced tea that sold out in its first week of release, and SUMMIT, a THC-forward citrus water. Both beverages are currently available in select retailers across Ontario.

Jeff Fallows, President of The Valens Company, said, “We are seeing challenges in the current market environment with several of our customers experiencing reduced workforces, temporary decreases in cultivation output, and a resulting reduction in demand for extraction services. Although retail demand for cannabis has surged during the COVID-19 pandemic and we are experiencing strong white label sales going into the second half of fiscal 2020, we are unable to predict the full impact these challenges will have on our second quarter financials. That being said, we continue to benefit from the flexibility of our platform, the quality of our output and the experience of our team in accessing opportunities both in the near and longer term.”

With a breadth of new products on the horizon, a white label platform that surpasses even the largest Canadian cannabis companies and a diversified customer base, we are well-positioned to adapt to ever-changing environments. Our strong cash position does not leave us complacent as our team looks to maximize capital allocation to generate the highest return on invested capital for our shareholders.

Jeff Fallows, President of The Valens Company

The following table of financial highlights is presented in thousands of Canadian dollars, except per share and biomass extracted amounts.

The management’s discussion and analysis for the period and the accompanying financial statements and notes are available under the Company’s profile on SEDAR at www.sedar.com.

Conference Call Details

The Company will host a conference call tomorrow, Wednesday, April 15, 2020, at 11:00 am Eastern Time / 8:00 am Pacific Time to discuss the financial results and business outlook.

Participant Dial-In Numbers:

Toll-Free: 1-877-407-0792
Toll / International: 1-201-689-8263
*Participants should request The Valens Company Earnings Call or provide confirmation code 13701091

The call will be webcast on the Valens Investor page of the Company website at https://thevalenscompany.com/investors/ or at this link. Please visit the website at least 15 minutes prior to the call to register, download, and install any necessary audio software. A replay of the call will be available on the Valens Investor page approximately two hours after the conference call has ended.

Tyler Robson, Chief Executive Officer, Chris Buysen, Chief Financial Officer, Jeff Fallows, President, and Everett Knight, Executive Vice President of Corporate Development and Capital Markets, will be conducting a question and answer session following the prepared remarks.

About The Valens Company

The Valens Company is a global leader in the end-to-end development and manufacturing of innovative, cannabinoid-based products. The Company is focused on being the partner of choice for leading Canadian and international cannabis brands by providing best-in-class, proprietary services including CO2, ethanol, hydrocarbon, solvent-less and terpene extraction, analytical testing, formulation and white label product development and manufacturing. Valens is the largest third-party extraction company in Canada with an annual capacity of 425,000 kg of dried cannabis and hemp biomass at our purpose-built facility in Kelowna, British Columbia which is in the process of becoming European Union (EU) Good Manufacturing Practices (GMP) compliant. The Valens Company currently offers a wide range of product formats, including tinctures, two-piece caps, soft gels, oral sprays and vape pens as well as beverages, concentrates, topicals, edibles, injectables, natural health products and has a strong pipeline of next generation products in development for future release. Finally, the Company’s wholly-owned subsidiary Valens Labs is a Health Canada licensed ISO 17025 accredited cannabis testing lab providing sector-leading analytical services and has partnered with Thermo Fisher Scientific to develop a Centre of Excellence in Plant-Based Science. The Company expects to formally change its name in due course. For more information, please visit http://thevalenscompany.com. The Company’s investor deck can be found specifically at http://thevalenscompany.com/investors/.

Original press release

April 12, 2020
 

You’re reading a copy of this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015. The newsletter includes unique insight to help our readers stay ahead of the curve as well as links to the week’s most important news.

Subscribe to receive our free weekly newsletter in your inbox each Sunday morning.

Friends,

One of the pivotal moments in the modern history of cannabis was the debut of Sanjay Gupta’s “Weed” on CNN in 2013. The documentary, which followed a year of interviews with medical leaders, experts, growers and patients, changed the game because it presented medical cannabis to the American public as something that could help people with severe health conditions. He shared with us the stories of regular people that could easily be our family members or friends who had found relief and improved the quality of their lives.

Gupta, who just four years earlier had written an article in TIME magazine titled “Why I would Vote No on Pot,” issued an apology, saying he had failed to do the proper research and said that the government had “terribly and systematically misled for nearly 70 years.”

“Weed” detailed the case of Charlotte Figi, who had been suffering seizures since soon after birth. Only medical cannabis was able to limit the seizures, something that we now understand better after the FDA approval of GW Pharma’s Epidiolex to treat uncontrolled seizures caused by rare pediatric epilepsy, like Charlotte’s Dravet syndrome, in 2018.

This week, tragically, Charlotte, the namesake for Charlotte’s Web, the Colorado-based company formed by the Stanley brothers who were also profiled in “Weed”, passed away due to complications related to COVID-19, ironically the same week that the FDA ruled that Epidiolex is no longer a controlled substance.

May we always remember the bravery of Charlotte and her family and be inspired to advocate for patients and to push for access to cannabis as medicine. First and foremost, we must, as a society, push for cannabis research. While anecdotal evidence of safety and efficacy abounds, we must remove the barriers to cannabis research that currently exist so that we can move beyond unproven claims and bring more legitimacy to our industry.

The DEA has stalled for years in expanding the number of providers of cannabis for medical research, though it finally announced rules to end the monopoly. The House of Representatives failed to advance the Medical Cannabis Research Act of 2019 introduced by Republican Matt Gaetz, though it was approved by the House Judiciary Committee. Last month, the House Committee on Veterans Affairs passed two bills, the VA Medicinal Cannabis Research Act and the Veterans Equal Access Act, unanimously. While we are making incremental progress, the process is playing out too slowly. Both sides of the aisle seem to be in agreement, so it is frustrating to see roadblocks continuing to impede medical cannabis research.

Charlotte Figi, rest in peace. You ignited a fire that won’t burn out. We as patients, care-givers, operators, researchers and voters will work to preserve your legacy.


From the beginning, Charlotte’s Web was created to pursue a singular purpose of helping people like Charlotte Figi, whose well-being had significantly improved after the use of the Stanley brothers’ customized extract. Since then, the Stanley brothers continue to advance CBD therapies through Charlotte’s Web, which has become the most trusted CBD brand in the world. The company has brought in executives capable of running a global consumer packaged goods organization, and it has doubled down on its efforts to advance cannabis science.


Get up to speed by visiting the Charlotte’s Web Investor Dashboard that we maintain on their behalf as a client of New Cannabis Ventures. Click the blue Follow Company button in order to stay up to date with their progress.


New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:


To get real-time updates download our free mobile app for Android or Apple devices, like our Facebook page, or follow Alan on Twitter. Share and discover industry news with like-minded people on the largest cannabis investor and entrepreneur group on LinkedIn.

Get ahead of the crowd! If you are a cannabis investor and find value in our Sunday newsletters, subscribe to 420 Investor, Alan’s comprehensive stock due diligence platform since 2013. Gain immediate access to real-time and in-depth information and market intelligence about the publicly traded cannabis sector, including daily videos, weekly chats, model portfolios, a community forum and much more.

Use the suite of professionally managed NCV Cannabis Stock Indices to monitor the performance of publicly-traded cannabis companies within the day or over longer time-frames. In addition to the comprehensive Global Cannabis Stock Index, we offer a family of indices to track Canadian licensed producers as well as the American Cannabis Operator Index.

View the Public Cannabis Company Revenue & Income Tracker, which ranks the top revenue producing cannabis stocks that generate industry sales of more than US$7.5M per quarter.

Stay on top of some of the most important communications from public companies by viewing upcoming cannabis investor earnings conference calls.

Discover upcoming new listings with the curated Cannabis Stock IPOs and New Issues Tracker.

Sincerely,

Alan & Joel

April 11, 2020
 
Our comprehensive guide to CBD topicals contains all the information you need to know about topical CBD oil. Click to start learning about how to use topical CBD, it's benefits and much more.
April 11, 2020
 
Our comprehensive guide to CBD for pets contains all the information you need to know about hemp oil that is designed for pets. Click to start learning about how to use hemp oil for pets, the benefits and much more.
April 11, 2020
 
Our comprehensive guide to CBD vape oil contains all the information you need to know about hemp CBD vape oil. Click to start learning about how to use CBD vape oil, the benefits and much more.
April 08, 2020
 
Michael Mills (Left) and Trip Hoffman (Right)

Exclusive Interview with Body and Mind President and Interim CEO Michael Mills and Body and Mind COO Trip Hoffman

Multi-state operator Body and Mind (CSE: BAMM) (OTCQB: BMMJ) started as a private company serving the Nevada medical market five years ago. Now, it has operations in Nevada, California, Arkansas and Ohio. President and Interim CEO Michael Mills and Chief Operating Officer Trip Hoffman spoke with New Cannabis Ventures about their company’s approach to measured growth and moving toward profitability. The audio of the entire conversation is available at the end of this written summary.

Experienced Leadership

Mills spent more than 30 years of his career in business, ranging from media to technology. He was an early investor in the cannabis space and decided to move into the industry himself. Hoffman comes from a scientific background, with a Ph.D. in physics. He also spent a significant portion of his career in the finance sector. In 2015, he decided he wanted to get into the cannabis space but found it difficult to raise capital with no direct experience. So, he answered a Craigslist ad and spent a few months working as a trimmer. From there, he owned a cultivation operation in Colorado and ran two dispensaries. Through his consulting work, he met the Body and Mind management team and joined them last year.

The Body and Mind Leadership Team

Body and Mind continues to have support from its founders, including Director Robert Hasman. Mills also points to CFO Dong Shim, who has worked with a number of public companies, as an important member of the leadership team.

From Private Nevada Company to MSO

Body and Mind was one of the original cultivation and production license holders in Nevada, which has allowed the company to build strong relationships with most of the purchasing managers and dispensaries in the state. Nevada is now a recreational market, and the company has products in almost all of its dispensaries. Body and Mind has two facilities in Nevada, recently completing the build-out of a new production facility.

Inside One of the Nevada Facilities

In California, the company has a definitive agreement in place with ShowGrow, which gives it a path to 100 percent ownership of a Long Beach dispensary. The deal is expected to reach completion in the next couple of months, according to Hoffman. Body and Mind also has manufacturing operations in Cathedral City and a license for a dispensary in San Diego that is expected to become operational soon.

The company won a license in Arkansas at the end of 2018 and developed its operations through 2019. Recently undergoing final inspections, this operation is expected to come online soon as well.

The Exterior of the BaM Arkansas Dispensary

In Ohio, Body and Mind owns 30 percent of a dispensary and production facility with a definitive agreement to own 100 percent. The dispensary has been open for over a year, and the production facility is under development, according to Mills.

Measured Growth

Instead of buying built dispensaries or buying a license, Body and Mind has found value in winning licenses. Additionally, the company’s approach to building out its operations has been measured. It has opened a facility and got it running efficiently, rather than opening multiple facilities at once. Wining applications will likely be the company’s approach going forward. States of interest include Michigan, Illinois and New Jersey.

Body and Mind has done strategic acquisitions, and it may do so again. With a number of companies feeling the capital crunch in the market, Mills expects that some licenses that have been sitting and waiting for development may become available. But, it will be circumspect in regard to opportunities. In the past, it has taken heat for not doing deals, but the company saw a number of these opportunities as expensive and not a match for its strategy of measured growth, according to Mills.

The Body and Mind Brand

The Body and Mind brand centers on higher-end products at a lower than average cost. In Nevada, the company spent the time to develop strains, hand trimming and growing in smaller batches. In addition to its flower products, the company has extracts, concentrates, vapes and edibles. Its edibles line includes chocolate-dipped pretzels, as well as gummies and mints.

Body and Mind’s Chocolate-Dipped Pretzels

The company is targeting a general demographic, aiming to appeal to anyone who wants to use cannabis medicinally or for relaxation and recreation.

Investors

Australis Capital is one of the company’s strategic investors, which has helped Body and Mind move forward with the ShowGrow deal and its definitive agreement in Ohio.

The company’s other investors, though none own more than 10 percent aside from founders, have been a supportive resource, according to Mills. He has had investors share their ideas and feedback on marketing, new products and more.

Funding and Capital Allocation

Body and Mind has done a relatively small number of financings, the last being in May of 2019. The development of the new Nevada production facility, Arkansas operations and the San Diego dispensary is largely complete. Since last summer, the company has been aiming to move to an EBITDA-positive model.

As it continues to grow, winning licenses will remain a priority, and Mills expects licenses to become less expensive in the near future. While a debt instrument may be an option to help fund expansion efforts, Body and Mind is largely aiming to reach a position where it does not need to raise capital.

Current Operating Challenges

Body and Mind is navigating the challenges of multi-state operations; demand is down in some markets and up in others. In Nevada, dispensaries have shifted to a delivery-only model in response to COVID-19, which has led to a decrease in wholesaling, according to Hoffman. In California, the company had its best month of sales in March and is looking forward to another growth month. While pivoting to meet these challenges, the company is also prioritizing the safety and security of its employees and customers.

Revenue Ramp Up in 2020

Thus far, the only revenue the company reports comes from its Nevada cultivation and production operations. Though running the Long Beach, California dispensary since August, the company has yet to complete the license transfers and take 100 percent ownership. The same is true of its Ohio operations. Once those definitive agreements are closed, that revenue will be consolidated to the top line. Plus, the company is close to bringing its San Diego and Arkansas dispensaries online. All of these initiatives represent a revenue ramp up for 2020.

The Completion of the ShowGrow Deal Will Help Ramp Up 2020 Revenue.

Body and Mind is in a unique position, with no serviceable debt and just over 100 million shares outstanding, according to Mills. With companies running out of capital and more consolidation on the horizon, Hoffman expects the companies that have the cash to reach profitability over the coming months will be the industry’s survivors.

To learn more, visit the Body and Mind website. Listen to the entire interview:

April 05, 2020
 

The cannabis sector has evolved substantially since I began following it 7 years ago, but the COVID-19 crisis has made it as challenging as ever to navigate. I created the video below to share my perspective on what investors should expect ahead. Most importantly, the cannabis industry capital crunch that we first discussed in September, has intensified. We could see private and public companies fail, and even the strongest companies will likely see slower growth as they curtail physical expansion. Some of the positive drivers, including the roll out of stores in Ontario and legalization by the legislative process in several American states, have been pushed out. On the other hand, the crisis has made legalization more appealing due to its positive impact on tax revenue and employment.

I discuss my views on each of the following sub-sectors:

  • 5 Large Canadian LPs: Large cash burns, substantial debt and complexity
  • Other Canadian LPs: Some better potential investments and simpler business models
  • Canadian Extraction LPs: Poised to benefit from the expansion of types of products available to include edibles, vape pens, beverages and other derivatives
  • Canadian Retailers: Good long-term prospects, but challenges near-term in this overlooked sub-sector
  • 4 Large American MSOs: Best access to capital than smaller rivals, better cash burns than larger Canadian counterparts
  • Other MSOs: Substantial risk for companies that aren’t adequately capitalized, but there are some that have strong balance sheets and even positive cash flow from operations
  • Ancillary Companies: Good way to bet on industry without picking specific operators
  • CBD Companies: Remains quite challenging, but FDA regulatory clarity could be a strong driver

In addition to discussing my outlook, I explained how readers of New Cannabis Ventures can leverage the investments we have made in our content and proprietary resources. For those looking for more insight and analysis, our premium service 420 Investor has been the go-to place for investors since 2013, and I discussed several of the features the service offers.

April 02, 2020
 
Innovative Industrial Properties Acquires Massachusetts Property and Expands Real Estate Partnership with AWH

Innovative Industrial Properties, Inc. (IIP), the first and only real estate company on the New York Stock Exchange (NYSE: IIPR) focused on the regulated U.S. cannabis industry, announced today that it closed on the acquisition of a property in Athol, Massachusetts, which comprises approximately 199,000 square feet of industrial space.

The purchase price for the Massachusetts property was approximately $26.8 million (excluding transaction costs). Concurrent with the closing of the purchase, IIP entered into a long-term, triple-net lease agreement with a subsidiary of Ascend Wellness Holdings, LLC (AWH) for continued operation as a licensed cannabis cultivation and processing facility. AWH is expected to complete tenant improvements for the property, for which IIP has agreed to provide reimbursement of up to approximately $22.2 million. Assuming full reimbursement for the tenant improvements, IIP’s total investment in the property will be $49.0 million. The lease provides for an initial annualized aggregate base rent of 13.5% of the sum of the initial purchase price and tenant improvement allowance, subject to a phase-in of the base rent associated with the tenant improvement allowance at the beginning of the term.

As the pioneering real estate investment trust (REIT) for the medical-use cannabis industry, IIP partners with experienced medical-use cannabis operators and serves as a source of capital by acquiring and leasing back their real estate assets, in addition to offering other creative real estate-based capital solutions.

This Massachusetts property represents IIP’s third real estate transaction with AWH. In December 2018, IIP acquired a 75,000 square foot industrial facility in Illinois and entered into a long-term, triple-net lease agreement with AWH for use as a regulated cannabis cultivation and processing facility, with IIP’s total investment in the property being $33.0 million. In July 2019, IIP acquired a 145,000 square foot industrial facility in Michigan and entered into a long-term, triple-net lease agreement with AWH for use as a regulated cannabis cultivation and processing facility upon completion of redevelopment, with IIP’s total investment in the property, assuming full reimbursement for tenant improvements, expected to be approximately $19.8 million.

AWH is a vertically integrated cannabis company, and is operating in each of Massachusetts, Illinois, Michigan and Ohio. AWH has raised $100 million in equity capital to date, including a $28.2 million round of financing that closed in December of last year. AWH is expected to have its first cannabis harvest at its Athol facility this month, and in January, received its provisional license from the Massachusetts Cannabis Control Commission for what is expected to be one of the largest dispensaries on the East Coast, a 16,000 square foot retail location situated near Faneuil Hall and TD Garden in the heart of downtown Boston. The Boston location is expected to open in January 2021.

“Abner and his team have achieved a tremendous amount of success over the past year, executing on their focused business model and ramping operations, and we are thrilled to support them as their long-term real estate capital partner on this third transaction in Massachusetts,” said Paul Smithers, President and Chief Executive Officer of IIP. “We are pleased that the Commonwealth of Massachusetts, in step with other state and local jurisdictions, has deemed medical cannabis an essential product, providing continued access to patients throughout the Commonwealth during this very difficult period.”

We greatly value our real estate partnership with IIP, and are very pleased to team with them for a third time on our Athol facility. With the tremendous acclaim and market success of our Ozone brand in Illinois and Michigan, we look forward to bringing our curated selection of cannabis products to the people of Boston and throughout the Commonwealth.

Abner Kurtin, Chief Executive Officer and Co-Founder of AWH

Similar to other states during this coronavirus health crisis, Massachusetts authorities ordered all businesses that are not offering essential services to close operations for a period of time. However, the Massachusetts Cannabis Control Commission deemed Medical Marijuana Treatment Centers and Certifying Health Care Providers as essential services that will remain open during this time, while instituting new protocols, such as certifications via telehealth, social distancing, cleaning and steps to protect populations particularly vulnerable to COVID-19 infection.

As of April 2, 2020, IIP owned 54 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New York, Nevada, North Dakota, Ohio, Pennsylvania and Virginia, totaling approximately 4.0 million rentable square feet (including approximately 1.2 million rentable square feet under development/redevelopment), which were 99.1% leased (based on square footage) with a weighted-average remaining lease term of approximately 16.1 years. As of April 2, 2020, IIP had invested approximately $675.5 million in the aggregate (excluding transaction costs) and had committed an additional approximately $158.8 million to reimburse certain tenants and sellers for completion of construction and tenant improvements at IIP’s properties. These statistics do not include up to approximately $13.4 million that may be funded in the future pursuant to IIP’s lease with a tenant at one of IIP’s Illinois properties, or the approximately $32.5 million that may be funded in the future pursuant to IIP’s lease with a tenant at one of IIP’s Massachusetts properties, as the tenants at those properties may not elect to have IIP disburse those funds to them and pay IIP the corresponding base rent on those funds. These statistics also treat IIP’s Los Angeles, California, property as not leased, due to the tenant being in receivership and its ongoing default in its obligation to pay rent at that location.

About Innovative Industrial Properties

Innovative Industrial Properties, Inc. is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities. Innovative Industrial Properties, Inc. has elected to be taxed as a real estate investment trust, commencing with the year ended December 31, 2017. Additional information is available at www.innovativeindustrialproperties.com.

About AWH

AWH is a market leading, vertically-integrated operator with retail and production facilities in Illinois, Ohio, Massachusetts, Michigan and New Jersey. AWH is breaking down traditional walls in the cannabis marketplace to create a unique, in-store customer experience and providing exclusive brand partnerships. AWH owns and operates state of the art cultivation facilities, growing heirloom and exotic-blend strains and producing a curated selection of products with effect-based categorization. AWH operates under the retail brands Illinois Supply and Provisions (IS&P), Michigan Supply and Provisions (MS&P) and Ohio Supply and Provisions (OS&P). AWH produces and distributes Ozone products and fosters exclusive brand partnerships with brands such as Cookies. For more information about AWH, visit www.awholdings.com.

Original press release

March 31, 2020
 

The American Cannabis Operator Index fell for the twelfth consecutive month, declining 27.9% to 21.09, its lowest monthly close since inception:

The index, which launched at the end of October 2018 with a value of 100, reached a closing high of 124.16 a week later before declining to 70.64 in late December 2018. It then rallied as high as 119.53 in early April before selling off over the balance of the year, ending 2019 at 43.27. The index has now dropped 51.3% in 2020. This past month, it posted an all-time closing low on March 18th at 14.50 before recovering a portion of its losses:

During March, the index included 16 companies, including 13 multi-state operators (MSOs) and 3 focused solely on CBD extracted from industrial hemp. Several MSOs are pursuing CBD strategies apart from their state-licensed cannabis businesses, giving the index additional exposure to that market beyond the pure-plays. No companies managed positive returns, while thirteen posted double-digit percentage losses, including three that lost more than 40% of their value:

The four best performing stocks were Trulieve (CSE: TRUL) (OTC: TCNNF), cbdMD (NYSE American: YCBD), MedMen (CSE: MMEN) (OTC: MMNFF) and CV Sciences (OTC: CVSI). Trulieve, which will be reporting its Q4 financials in early April, was quiet on the news front, but investors likely gravitated to the name due to it being profitable historically. cbdMD was one of the better relative performers for the second month in a row after a being the worst performer in January, when it raised capital. MedMen was one of last month’s worst performers, when it lost 46%. CV Sciences reported a Q4 that showed revenue in decline and gave weak guidance for Q1 as well but bounced after the report.

The four worst performing stocks were Green Growth Brands (CSE: GGB) (OTC: GGBXF), Harvest Health and Recreation (CSE: HARV) (OTC: HRVSF), Acreage Holdings (CSE: ACRG) (OTC: ACRGF) and Planet 13 Holdings (CSE: PLTH) (OTC: PLNHF). Green Growth Brands announced a potential sale of its CBD business, but that looks to be wrecked by COVID-19. The company’s CEO resigned and many of its employees were terminated. Harvest fell sharply after it announced a capital raise. It also terminated its pending acquisition of Verano Holdings. Acreage Holdings reported in late February. In March, it accessed $43 million in debt. Planet 13, which currently generates all of its revenue from a single store that caters to tourists in Las Vegas, was likely impacted by the shutdown of tourism. I recently published an in depth review of the company for subscribers at 420 Investor ahead of their Q4 financials that will be released in April.

For April, the number of names in the index will will decrease to 15 with the departures of Green Growth Brands and Marimed (OTC: MRMD), both of which fell below the minimum price required for inclusion, and the return of AYR Strategies (CSE: AYR) (OTC: AYRSF).

In the next monthly review, we will summarize the performance for April and discuss any additions or deletions. Be sure to bookmark the page to stay current on American cannabis operators stock price movements within the day or from day-to-day.

March 29, 2020
 

The Public Cannabis Company Revenue & Income Tracker, managed by New Cannabis Ventures, ranks the top revenue producing cannabis stocks that generate industry sales of more than US$7.5 million per quarter (C$10.5 million). This data-driven, fact-based tracker will continually update based on new financial filings so that readers can stay up to date. Companies must file with the SEC or SEDAR to be considered for inclusion. Please note that we raised the minimum quarterly revenue in May 2019 from US$2.5 million and from US$5.0 million in October 2019.

46 companies currently qualify for inclusion, with 29 filing in U.S dollars and 17 in the Canadian currency, which is up from 45 when we reported at the end of February. Two Canadian licensed producers, Delta 9 Cannabis (TSX: DN) (OTC: VRNDF) and Radient Technologies (TSXV: RTI) (OTC: RDDTF), qualified for inclusion based on recent reports, while we have removed Origin House, which was acquired earlier this year by Cresco Labs.

In May 2019, we began to include an additional metric, “Adjusted Operating Income”, as we detailed in our newsletter. The calculation takes the reported operating income and adjusts it for any changes in the fair value of biological assets required under IFRS accounting. We believe that this adjustment improves comparability for the companies across IFRS and GAAP accounting. We note that often operating income can include one-time items like stock compensation, inventory write-downs or public listing expenses, and we recommend that readers understand how these non-cash items can impact quarterly financials. Many companies are moving from IFRS to U.S. GAAP accounting, which will reduce our need to make adjustments.

One trend we have observed is that many of the companies are now providing pro forma revenue as well, which is an attempt to more accurately portray the operations by taking into account the results of closed and pending acquisitions as the multi-state operator (MSO) space rapidly consolidates. Our rankings include only actual reported revenue.

For companies that report in U.S. dollars, Charlotte’s Web (TSX: CWEB) (OTC: CWBHF), Columbia Care (NEO: CCHW) (OTC: CCHWF), Curaleaf Holdings (CSE: CURA) (OTC: CURLF), CV Sciences (OTC: CVSI), Green Thumb Industries (CSE: GTII) (OTC: GTBIF), GrowGeneration (NASDAQ: GRWG) and Tilray (NASDAQ: TLRY) have reported in the first four weeks of March. The U.S. cannabis operators have shown solid growth in revenue, while the CBD companies have seen sales decline sharply from Q3.

GTI, perhaps just temporarily, took the lead among MSOs in terms of revenue, with its Q4 revenue growing 12% from Q3 and 265% from a year ago to $75.8 million. It provided guidance that revenue in Q1 will be in a range of $91-95 million, up 20-25% from Q4. Curaleaf grew revenue in Q4 by 22% to $75.5 million, while Columbia Care experienced sequential growth of 5%. Curaleaf expects is managed revenue to grow from $81.7 million to at least $100 million.

In line with the top-line growth among MSOs, GrowGeneration experienced 17% sequential growth to $25.4 million and provided 2020 guidance of $130-135 million, including projected Q1 revenue of $32 million, 144% above year-ago revenue.

In contrast to the growth by the state-regulated cannabis operators, CV Sciences saw revenue decline 25% in Q4 from Q3 and by 34% from a year ago. It also projected further declines in Q1 to $6-8 million. Charlotte’s Web experienced a sequential decline of 9%, with its $22.8 million Q4 revenue growing 6% from a year ago. It provided guidance for 2020 revenue growth of 10-20%, with Q1 revenue expected to be approximately $20 million. Both companies cited intense competition in the natural health channel as well as delays by the FDA regarding regulation for ingestibles as contributing factors to the near-term weakness.

Finally, Canadian LP Tilray saw revenue decline sequentially in its Q4 by 20%.

American Dollar Reporting – Public Cannabis Company Revenue Tracker

Village Farms (TSX: VFF) (NASDAQ: VFF) will report its Q4 on March 30th, while Marimed (OTC: MRMD), which is taking a large write-down, expects to report its Q4 on March 31st, and it will be removed due to its no longer qualifying based on its pre-announcement that suggested revenue will be less than $6 million. During April, we expect reports from a substantial number of companies, though only Harvest Health (CSE: HARV) (OTC: HRVSF) and iAnthus (CSE: IAN) (OTC: ITHUF) have announced dates.

Harvest is expected, according to Sentieo, to have generated Q4 revenue of $41.1 million, representing 24% growth from Q3. iAnthus is expected to have seen Q4 revenue expand by 26% to $28.1 million compared to Q3.

Two of the larger MSOs that haven’t yet announced dates for their Q4 conference calls are Trulieve (CSE: TRUL) (OTC: TCNNF) and Cresco Labs (CSE: CL) (OTC: CRLBF). Trulieve could regain its leadership position among MSOs, as it is expected to have generated $78.4 million in revenue, up 11% from Q3, while Cresco Labs is expected to grow revenue sequentially by 25% to $45.3 million.

KushCo Holdings (OTC: KSHB) pre-announced Q2 revenue at approximately $30 million, representing a decline of 14% from Q1.

Of the companies that report in Canadian dollars, LPs Delta 9 and Radient Technologies and retailer Alcanna (TSX: CLIQ) (OTC: LQSIF) reported in the first four weeks of March. Delta 9’s revenue grew 59% in Q4 compared to Q3, driven by sales of grow pods and other B2B offerings, which accounted for 36% of overall revenue. All of the revenue for Radient Technologies was generated through a single customer, presumably Aurora Cannabis (TSX: ACB) (NYSE: ACB). The vast majority of revenue at Alcanna is generated through its alcohol stores, but its cannabis operations generated C$13 million, similar to Q3.

Canadian Dollar Reporting – Public Cannabis Company Revenue Tracker

Over the balance of March and through April, we will receive financial updates from LPs Medipharm Labs (TSX: LABS) (OTC: MEDIF), Sundial Growers (NASDAQ: SNDL), Cronos Group (TSX: CRON) (NASDAQ: CRON) and HEXO Corp (TSX: HEXO) (NYSE: HEXO) and retailer High Tide (CSE: HITI) (OTC: HITIF) this week and LPs Aphria (TSX: APHA) (NYSE: APHA), Organigram (TSX: OGI) (NASDAQ: OGI) and TerrAscend (CSE: TER) (OTC: TRSSF) in mid-April. Retailers Fire & Flower (TSX: FAF) (OTC: FFLWF) and Meta Growth (TSXV: META) (OTC: NACNF) and LP Valens Company (TSXV: VLNS) (OTC: VLNCF) are expected to report by the end of April.

MediPharm Labs, which reports on March 30th, is expected to see Q4 revenue decline by almost 10% from Q3, according to Sentieo’s analyst consensus, which is at C$39.3 million. The company began generating revenue in 2019. Sundial Growers reports on the 30th and will host a call on the 31st. The company, which has delayed its report in order to complete modifications to its credit agreements, is also expected to have experienced a decline in Q4 revenue from C$33.5 to C$31.6 million. It generated $28 million from its cannabis operations in Q3, with the balance from ornamental flowers. HEXO Corp will report on the 30th, which is after the filing deadline. The company announced in mid-March that its Q2 net revenue grew sequentially by 17% to C$17 million. It also indicated that it expects to take an impairment charge of up to C$280 million. Cronos Group had previously scheduled its call for late February but delayed for unstated reasons. As an accelerated filer, it was required to file by March 2nd but took an extension of 15 days. It later revealed that it was restating its prior financials and hopes to have its Q4 audited financials available by the 30th, but it indicated that the timeline might not be met due to the COVID-19 pandemic. Analysts expect the company to have generated C$16.2 million during Q4. Cronos Group had previously reported C$14.6 million revenue for Q3, but it has indicated that it will be restated to C$9.5 million. High Tide will be reporting financials for its Q1.

TerrAscend will be reporting its Q4 financials on April 15th, with analysts projecting revenue of C$40 million, up 49% from Q3, according to Sentieo. Aphria and Organigram will be providing quarterly financials. Neither company has yet announced the date, but they are due by April 14th. Aphria, which generates the majority of its revenue from non-cannabis operations, is expected to have Q3 revenue $130 million, which would represent growth of 8% over Q2. The company provided annual guidance for the fiscal year of net revenue of C$575-625 million with adjusted EBITDA of C$35-42 million in January, having reported year-to-date revenue of C$247 million and adjusted EBITDA of C$2.9 million. Organigram is projected to increase revenue by 9% to C$27.4 million in its Q2 compared to its Q1, up slightly from year-ago revenue.

Fire & Flower will be reporting its fiscal year-end, while Meta Growth and Valens will be providing quarter-end financials.

Visit the Public Cannabis Company Revenue Tracker to track and explore the complete list of qualifying companies. We have recently created a way for our readers to access our library of Revenue Tracker articles. For our readers who are interested in staying on top of scheduled earnings calls in the sector, we have have created and continually update the Cannabis Investor Earnings Conference Call Calendar. Finally, for many of these companies, we publish comprehensive earnings previews for subscribers at 420 Investor.

March 27, 2020
 

DENVER–(BUSINESS WIRE)–Medicine Man Technologies, Inc. (OTCQX: MDCL) (“Medicine Man Technologies” or “the Company”) today launched a collective platform to support strategic partners through COVID-19.

In accordance with emergency rules and regulations in place throughout the state of Colorado due to COVID-19, cannabis dispensaries are now meeting the needs of patients and adult-use consumers via curbside service only. As such dispensaries have moved to new methods of order taking both via online and via the phone. Medicine Man Technologies has launched a platform to bring together all the Company’s strategic partners offerings to one place.

Our strategic partners are hard at work ensuring the safety of employees, the patients and adult-use consumers and the communities where they operate. To support their efforts, we have created an online marketplace platform to bring together our strategic partners’ ordering capabilities, collectively in one place.

Shane Sampson, Chief Marketing and Merchandising Officer

“This technology platform brings consumers another avenue for fulfilling their cannabis needs,” said Nirup Krishnamurthy, Chief Integration and Information Officer. “Medicine Man Technologies platform enables Colorado consumers to find information and updates for the Company’s strategic partners dispensary operations as we all navigate through COVID-19.”

The Company’s dispensary strategic partners include Medicine Man, Starbuds, Colorado Harvest Company, Strawberry Fields, Roots Rx and Mesa Organics. Visit https://www.medicinemantechnologies.com/marketplace/ to learn more about our partners and their cannabis offerings.

For more information about Medicine Man Technologies, please visit www.MedicineManTechnologies.com.

About Medicine Man Technologies

Denver, Colorado-based Medicine Man Technologies (OTCQX:MDCL) is a rapidly growing provider of cannabis consulting services, nutrients, and supplies. The Company’s client portfolio includes active and past clients throughout the cannabis industry in 20 states and seven countries. The Company has entered into agreements to become one of the largest vertically integrated seed-to-sale operators in the global cannabis industry. Current agreements will enable Medicine Man Technologies to offer cultivation, extraction, distribution and retail pharma-grade products. Management includes decades of cannabis experience, a unique combination of first movers in industrial cannabis and proven Fortune 500 corporate executives.

Original press release

March 25, 2020
 

Exclusive Interview with Delta 9 Founder and CEO John Arbuthnot

Delta 9 (TSX: DN) (OTCQX: VRNDF), based in Winnipeg, Manitoba, has three distinct business segments: wholesale, retail and B2B. This diversified strategy has helped the vertically integrated operator to expand across western Canada, and it is now looking to push to the east. Founder and CEO John Arbuthnot spoke with New Cannabis Ventures about the company’s Grow Pods, retail operations and phased expansion plans. The audio of the entire conversation is available at the end of this written summary.

From 2012 to Today

In 2012, Arbuthnot started Delta 9 with his father Bill Arbuthnot under the MMPR program, gaining the 14th Health Canada license issued in March 2014. For the first few years of its operations, the privately held company supplied cannabis to a few thousand medical patients. In 2017, Delta 9 hit several major growth milestones. It raised approximately $10 million throughout the year and listed its shares on the TSX Venture. Since that time, the company has raised approximately $80 million and put that capital toward its three main business segments, according to Arbuthnot. The company’s shares have also been uplisted to the TSX, and Delta 9 has recorded profit from operations in its most recent quarter.

The Delta 9 Team

The company has approximately 220 employees, most of which are located at its large site in Manitoba. Delta 9 has built out a large management team to support its three main businesses. It has VPs in each main segment with experience in analogous industries. Leaders in the production and distribution piece of the business have experience in manufacturing and agriculture. Leaders in the retail segment have experience in the liquor industry, and leaders in the B2B piece of the business have experience in areas such as Health Canada compliance, construction, security and consulting.

Arbuthnot also pointed to a number of Delta 9’s directors and executive leaders as important elements of the leadership team. The board of directors, including Nitin Kaushal, Hugh Aird and Joanne Duhoux-Defehr, bring with them extensive experience in corporate governance. Bill Arbuthnot serves as Chairman, as well as President. Seasoned CFO Jim Lawson and VP of Corporate Affairs Ian Chadsey are also important members of the senior-level management team.

Retail

Delta 9 has four of about 30 retail stores in Manitoba, but the company has managed to achieve an outsized market share, according to Arbuthnot. The company captures that market share through its location and pricing strategies. It has placed its retail stores in high visibility areas with a lot of foot traffic, located by other retailers like grocery stores and liquor stores for consumer convenience. Delta 9 also has a lean markup on its products, which has helped to position it as a price leader in the market. This strategy has allowed it to compete against not only legal operators but against the black market as well, according to Arbuthnot.

Delta 9 Retail Stores Are Located in High-Visibility Areas.

In 2019, retail operations generated about $15.4 million in revenue, and this business segment is set for further growth. The company has a pending deal for its first two stores in Alberta and plans to open up to 12 additional stores over the next couple of years.

The company’s three different business segments are designed to be complementary. The data generated by the thousands of daily transactions processed at retail locations can be analyzed to understand consumer demographics, price point demand and product preference. In turn, this information can be used to guide the strategy for the company’s production and wholesale operations.

Since the launch of Cannabis 2.0 products, Arbuthnot has seen significant consumer demand. Initially, he has observed the average cart size increasing. Consumers are still buying dried flower and prerolls, but they are adding other 2.0 products to try. He expects to have a good sense of how the new product categories will play out after another few quarters.

The Interior of a Delta 9 Retail Location

Grow Pods and Wholesale Distribution

Delta 9 has an 80,000-square-foot facility in Winnipeg, but it takes a different approach to cultivation. Instead of the greenhouse or outdoor model, the company grows its cannabis in retrofitted shipping containers called Grow Pods. The company customizes standard 40-foot high cubic shipping containers with wall panels, lights, HVAC and security systems. These Pods are scalable and stackable.

Delta 9’s Modular Grow Pods Are Stackable.

This model has several benefits. First, it affords the company a high level of control over the growing environment, which can be a challenge in large-scale cultivation operations. The conditions of the Pods are carefully controlled to maximize the quality of the finished product. The smaller, separate Pods also mitigate some of the risks associated with growing. If disease or contamination occurs in a large, open operation, it can spread throughout the entire facility. With separate pods, Delta 9 is able to decrease this risk. Contamination or disease in one pod does not mean the facility’s entire crop is affected.

Additionally, the Grow Pods help the company to specialize. Delta 9 is producing about 30 different varieties of cannabis at any time, according to Arbuthnot. Different strains of cannabis can require different environments, and the separate pods allow for that customization.

The company manufactures the pods, a lean capex model. Right now, it has 297 Grow Pods in production, which supports an annual production capacity of 8,300 to 8,500 kilograms. Delta 9 is currently distributing in Manitoba, Alberta, Saskatchewan and British Columbia. It is beginning to look at opportunities in eastern provinces like Ontario. Eventually, Arbuthnot is envisioning the company as a national distributor. In 2019, the company’s wholesale revenue was $9.5 million.

B2B Services

Delta 9’s B2B service line has three main components. The company sells its proprietary Grow Pods to other licensed and pre-licensed companies. It offers consulting and licensing services. And, it sells its genetics–the company has a seed bank of approximately 75 different cannabis strains. This division of the company helps other cannabis entrepreneurs enter the space. The company is able to offer these customers equipment, help them navigate the Health Canada licensing process and ultimately provide them with genetics. Beyond that, the company will often sign long-term offtake agreements with its B2B customers. Arbuthnot sees this is a way to create an ecosystem of smaller craft producers, which sell their products through Delta 9’s existing distribution channels.

The B2B division has become a more significant source of revenue for the company over the past year. In 2019, revenue for this division was about $6.2 million, up from $900,000 in the previous year. Roughly 90 percent of the B2B division’s revenue comes from the sale of Grow Pods, while the remainder is split equally between the consulting and genetics offerings, according to Arbuthnot.

Industry Partnerships

Delta 9 sees value in forming long-term relationships with fellow cannabis companies. For example, it works closely with Auxly. Auxly is a large strategic investor in the company (it invested $16.25 million in Delta 9 in 2018), and it has a long-term supply agreement with Delta 9. The company is providing Auxly with high-quality flower, as well as trim and extraction-grade material to make Cannabis 2.0 products. Additionally, Delta 9 has announced a commercial rights agreement to purchase products from Auxly and distribute them through its retail network.

The company also has a white labeling agreement with Westleaf. Delta 9 is providing Westleaf Labs in Calgary with offtake and extraction material, which is being used to manufacture Delta 9 Cannabis 2.0 products. The first products will be Delta 9 branded vaporizers. Arbuthnot sees these kinds of relationships as beneficial for the companies involved and their investors.

Expansion Plans

Last year, Delta 9 focused on the second phase of its expansion plans. The company went from 154 of its Grow Pods to 297. Next, the company is planning to complete its purpose-built processing center. This fully automated facility will allow the company to bottle, package and label approximately 25,000 kilograms of consumer packaged goods each year. Delta 9 will also be expanding its 80,000-square-foot facility to 135,000 square feet, which will allow for the addition of another 128 Grow Pods, taking the total to over 420.

The company is well-funded for its phase two expansion, which will be staged out over 2020 and beyond as required, according to Arbuthnot. Delta 9 is also looking ahead to the third phase of its expansion plan, which will roll out over the next several years. The expense for this phase is expected to be around $120 million.

Delta 9 is planning to largely fund future expansion with cash flow, rather than going back to the equity markets. If necessary, it will consider equity or non-dilutive financing. The company has access to an $18.1 million credit facility with Canadian Western Bank, which speaks to the company’s maturity, according to Arbuthnot.

Growth in an Uncertain Landscape

While the COVID-19 pandemic continues to disrupt daily life, Delta 9 has been able to continue making routine shipments and to maintain its retail and B2B operations thus far. The company is prioritizing the health and safety of its staff and customers. It is encouraging social distancing, providing workers with personal protective equipment and installing Plexiglas shields at the checkout areas in its retail locations. The company will continue to adhere to advice from provincial and federal healthcare officials as the situation evolves.

The company is not providing formal guidance for 2020. Rather, it is pointing to its 2019 results to demonstrate its management team’s focus on execution. Delta 9 had approximately $31 million in operating revenues last year, up from $7.6 million in the previous year, with a little more than $10 million in gross profit for the year, according to Arbuthnot. The company also finished the year with $22.8 million in working capital.

While the current pandemic makes future plans uncertain, Delta 9 is planning to expand into new provincial distribution markets, grow its retail footprint, add new products and continue building relationships through its B2B division. The company will focus on creating shareholder value across all of its initiatives.

To learn more, visit the Delta 9 website. Listen to the entire interview:

March 22, 2020
 

You’re reading a copy of this week’s edition of the free New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015.

Sign up to receive a copy in your inbox each Sunday morning.

Friends,

The cannabis sector experienced something we haven’t seen in quite a while Friday, rallying sharply despite weakness in the broad stock market. In fact, the New Cannabis Ventures Global Cannabis Stock Index bounced 14.3% from the all-time low set on Wednesday as the S&P 500 fell almost 4%. For the full week, cannabis stocks declined 8.5%, far less than the 15% drop in the S&P 500.

Extreme Pessimism

For perspective, cannabis stocks have performed quite poorly. Even with the bounce, they are down 54.1% in 2020 thus far, and this follows declines of 34.1% last year and 54.9% in 2018. Our survey in last week’s newsletter, not surprisingly, revealed extreme pessimism among respondents, with over 70% expecting the decline to persist at least over the balance of the month:

The index had closed at 21.18 on the Friday before our newsletter went out, but we kept the survey open until Monday evening, when the index closed at 18.99 and note that it closed at 19.38 on Friday.

More Gains Ahead or Just a Bounce?

Is this the beginning of a new bull market in cannabis stocks, which have declined 82% from the peak exactly a year ago, or is this a chance to sell? We think it is a bit early to call a bottom and have seen many other apparent bottoms prove not to be, but we hope the plunge and partial recovery does signify the end of the decline that began in early 2018. We would attribute the bounce to two factors. First, there was likely some short-covering. Second, and perhaps more importantly, news reports of surging demand for cannabis along with all states that are restricting business activities not forcing dispensaries to close likely attracted some buyers.

Of course, the short-term spike in sales, as described by Akerna as an increase of 19.2% on March 18th from March 11th, isn’t sustainable, but we do think that when some sense of normalcy returns, there are likely to be two big takeaways for cannabis investors. First, we have come a long way in recent years such that state governments categorize cannabis as “essential”. This reinforces the state-legal proliferation thesis. Second, the pandemic isn’t likely to end quickly, which leads to two positive implications. First, cannabis legalization could be seen as more important to states looking for tax revenue and job growth. Second, cannabis companies may see more demand as consumers cope with increased anxiety, trouble sleeping and other conditions that are being exacerbated by this crisis.

Rather than suggest to our readers to be buyers or sellers in general, we will share this perspective: This is a great time to consider repositioning. Last week, we warned that many companies will be forced to raise capital on egregious terms, diluting existing shareholders. Some companies, though, are better positioned to weather the current environment than others. Some of the biggest bounces are taking place in some of the companies less likely to avoid dilution, and we think it could make sense to use the rally to reduce exposure to them and to increase it to companies that are in a better position. At our premium service, 420 Investor, we have been discussing this theme extensively as we also reposition our model portfolios.

A New Threat to Investors Emerges

This week, something that caught our attention should alarm investors in small cannabis companies, the “take-under” of Indus Holdings. This is a story most readers probably aren’t following, so let us summarize. A week ago, the California cultivator and processor, which has its own brands but also provides turnkey services to other companies, had a market cap of just $7 million (and today as well) at a price of just $0.21 (C$0.30). The company, which generated $10.1 million revenue in Q3 and $26.2 million year-to-date, had used $31.3 million to fund its operations through the first three quarters of the year and had ended the quarter with just $2.7 million in unrestricted cash, leaving it in dire need of additional investment, which it found through an outside investment group.

The pending Geronimo Capital investment into Indus consists of up to $14.5 million in a convertible note with a conversion price of $0.20, approximately where the stock had closed previously. Doing the math, this would convert to over 72 million shares for a company that currently has just 32.5 million shares and no debt. Though there will be no shareholder vote apparently, this is a change-in-control, with existing shareholders owning potentially just 31% of the recapitalized company. Since the investment is debt, it is possible that the new investors could end up with the entire company should the financial condition deteriorate and the company seek creditor protection.

Indus went public with a $40 million capital raise at $11.60, so this next round is a bit of a down-round at $0.20, down almost 98%. The balance sheet of the company showed assets, nearly all tangible, as $85.8 million, with liabilities of $44.1 million. The company agreed to give control to outside investors (as well as some insiders that are participating) at a valuation that represented approximately 16% of tangible book value. Annualizing the Q3 revenue, the valuation represented 16% of one-year sales as well. The alternative to selling out at such a low price may have been worse, as the company may not have been able to continue as a going concern.

Focus on Earnings

We caution our readers to be particularly careful with companies that aren’t on a path to profitability and that lack access to capital, as we expect many other small cannabis companies could be taken over at terms that aren’t favorable or risk extinction, as we discussed in last week’s newsletter. This environment elevates the risks to investors in these types of companies in general but especially in our industry, where capital is even more constrained. On the other hand, several companies that are either close to or at profitability or that are adequately capitalized have declined with the market-wide sell off, and this could be an opportunity for investors who want to participate in the growth ahead.


You’re reading a copy of this week’s edition of the New Cannabis Ventures newsletter, which provides thought-provoking commentary on the industry from a financial and business perspective. We do this at no cost to our expansive readership, which spans greatly from industry executives, family investment offices, competing industries, regulators and retail investors. The newsletter represents an example of the extensive content we provide daily and in real-time on Alan Brochstein’s 420 Investor service, built to help investors navigate the complexities of the cannabis sector.


New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:


To get real-time updates download our free mobile app for Android or Apple devices, like our Facebook page, or follow Alan on Twitter. Share and discover industry news with like-minded people on the largest cannabis investor and entrepreneur group on LinkedIn.

Get ahead of the crowd! If you are a cannabis investor and find value in our Sunday newsletters, subscribe to 420 Investor, Alan’s comprehensive stock due diligence platform since 2013. Gain immediate access to real-time and in-depth information and market intelligence about the publicly traded cannabis sector, including daily videos, weekly chats, model portfolios, a community forum and much more.

Use the suite of professionally managed NCV Cannabis Stock Indices to monitor the performance of publicly-traded cannabis companies within the day or over longer time-frames. In addition to the comprehensive Global Cannabis Stock Index, we offer a family of indices to track Canadian licensed producers as well as the American Cannabis Operator Index.

View the Public Cannabis Company Revenue & Income Tracker, which ranks the top revenue producing cannabis stocks that generate industry sales of more than US$7.5M per quarter.

Stay on top of some of the most important communications from public companies by viewing upcoming cannabis investor earnings conference calls.

Discover upcoming new listings with the curated Cannabis Stock IPOs and New Issues Tracker.

Sincerely,

Alan & Joel

March 19, 2020
 
The Source, with two marijuana locations in Las Vegas, said it is transitioning to medical-only sales for its patients as an additional safety precaution amid the coronavirus pandemic, becoming the latest retailer to do so
March 19, 2020
 
Human resources executives around the state are realizing that the real work of understanding and applying the law to their employees is just beginning. Employers will need to refine existing policies and, in many cases, craft entirely new ones to address the issues created with legalization, a proc
March 18, 2020
 
Fallout surrounding coronavirus has pushed some California marijuana firms further to the brink as they deal with new business uncertainties
March 17, 2020
 

In late 2018, MariMed (OTC: MRMD) announced a $30 Million investment into GenCanna Global, a Kentucky-based hemp company, to help it expand its processing facilities. Today, the company revealed in an SEC Form NT 10-K that it has written off not only its investment in the company, which declared bankruptcy in February, but also an additional $33 million related to its $29 million receivables balance with GenCanna as well as its $4 million unearned revenue.

Through the third quarter, MariMed had reported year-to-date revenue of over $40 million, with $29 million from GenCanna. In its 10-Q, it highlighted the receivables on its balance sheet:

To be clear, the company booked revenue of $29 million from the affilated GenCanna without receiving a dime. This is detailed in the same filing:

During the nine months ended September 30, 2019, MariMed Hemp purchased $21.6 million of hemp seeds for its wholesale hemp distribution business and to develop hemp-derived CBD products. The seeds meet the U.S. government’s definition of federally legal industrial hemp, which was descheduled as a controlled substance and classified as an agricultural commodity upon the signing of the 2018 U.S. Farm Bill. As previously disclosed in Note 1 – Organization and Description of Business, as of September 30, 2019, MariMed Hemp sold a majority of these seeds to GenCanna, a related party, at market value which generated $33.2 million of receipts. The Company provided GenCanna with extended payment terms through December 2019, to coincide with the completion of the seeds’ harvest, although the payment by GenCanna is not contingent upon the success of such harvest or its yield.

As required by the relevant accounting guidance, the Company classified the $33.2 million of billings to GenCanna as a receivable from a related party, with approximately $29,0 million recognized as revenue from a related party for the nine months ended September 30, 2019, and approximately $4.2 million recorded under Unearned Revenue From Related Party on the balance sheet. Upon payment of the receivable balance by GenCanna, the amount in Unearned Revenue From Related Party will be recognized as revenue.

MariMed closed at $0.206, down almost 96% from its all-time high of $5.80 set in late 2018:

The company expects to file its 10-K by the end of the month. It provided additional information, including full year projected revenue of $46 million, including the $29 million it recognized previously from GenCanna. Q4 revenue, then will be approximately $5.4 million, suggesting modest improvement from the $4.2 million it reported beyond its GenCanna-related sales. Further, full year cost of goods is expected to be $27 million, while operating expenses are projected to be $52-60 million, which includes the $29 million receivable write-down as well as an additional $10-18 million in write-downs. Additionally, it expects to report $40 million non-operating expenses, which includes its $30 million GenCanna investment and $13 million in interest expense. Adding it all up, the company sees a pre-tax loss of $73-81 million for the full year, almost all of which will hit during Q4 given the year-to-date pre-tax loss of $612,369 through Q3.

The loss would appear to eliminate almost all of the equity on the balance sheet at Q3, which was $82.8 million. MariMed ended Q3 with just $136,682 in cash and reported current liabilities in excess of $35 million, including a $21 million note payable, some of which was due in 2019 and the balance of which was due in January. In February, the company amended a note for $11.5 million that was due in January:

On February 10, 2020, MariMed Inc. (the “Registrant”) entered into an Amendment Agreement (the “Amendment Agreement”) with respect to the Facility Agreement and Promissory Note (the “Original Note”) dated as of June 4, 2019 between the Registrant, MariMed Hemp, Inc., a wholly owned subsidiary of the Registrant and SYYM LLC (the “Holder”). The Original Note provided for a payment in the amount of $11,500,000 on January 31, 2020 from the Registrant to the Holder. Pursuant to the terms of the Amendment Agreement, the Registrant issued to the Holder an Amended and Restated Promissory Note (the “New Note”) in the principal amount of $11,500,000, bearing interest at the rate of fifteen percent per annum, due on June 15, 2020, with minimum amortization payments of $3,000,000 due on or before April 30, 2020. The New Note is secured by a first priority security interest in the assets of certain of the Registrant’s subsidiaries and brands and a pledge of the Registrant’s ownership interest in certain of its subsidiaries.

Later in the month, the company borrowed $4.4 million from Navy Capital. Investors will learn more shortly about the company’s financial position when it files the 10-K, but clearly the hemp venture has significantly damaged the financial condition of MariMed, which also owns and operates state-licensed cannabis facilities in Delaware, Illinois, Rhode Island, Maine, Massachusetts, Maryland and Nevada.

March 16, 2020
 
As we prioritize health and wellness, all of your favorite CBD products are still available to order online and have delivered to your home or business.
March 16, 2020
 

CV Sciences, Inc. Reports Fiscal Year-End 2019 Financial Results

Record full year revenue

SAN DIEGO, March 16, 2020 (GLOBE NEWSWIRE) — CV Sciences, Inc. (OTCQB:CVSI) (the “Company”, “CV Sciences”, “our”, “us” or “we”), a preeminent supplier and manufacturer of hemp cannabidiol (CBD) products, today announced its financial results for the year ended December 31, 2019.

Fiscal 2019 and Recent Operating Highlights

  • Revenue of $53.7 million for fiscal year 2019;
  • Total retail distribution increased to more than 5,500 stores as of December 31, 2019, a 148% increase from December 31, 2018 including new and/or expanded partnerships with national retail chains;
  • Broadened retail presence in the food, drug and mass channel (FDM) and in active discussions for further expansion of the PlusCBD™ Oil brand;
  • Expanded e-commerce sales to 19% of total net revenue, up from 14% for 2018;
  • Launched updated +PlusCBD™ Oil website in January 2020 to enhance customer experience and drive increased e-commerce sales;
  • Launched 18 new products during fiscal 2019;
  • Gross margin of 65% for fiscal year 2019; and
  • Maintained strong total cash balance of $9.6 million at year end.

“During 2019, revenue grew by 11% to $53.7 million driven by our expansion into new sales channels and distributions gains that produced a 148% increase in retail locations, including a strong presence in multiple national retailers. It was a year of significant business development, including distribution and product offering expansions, our first entry into the national food, drug and mass channel and establishing the foundation and infrastructure in anticipation of long-term growth of the hemp-derived CBD market. This past year demonstrated great progress and promise for the hemp CBD industry and CV Sciences, although the industry also faced challenging external forces. In the face of near-term headwinds, including regulatory ambiguities, heightened competition aided by a lack of regulatory clarity, and occasional unfavorable media attention as the regulatory environment develops, CV Sciences managed to achieve the highest annual sales in our company history. We are focused on further strengthening our brand, product offerings and adding new categories as we monitor the ongoing development of the market and position ourselves for future opportunities,” stated Joseph Dowling, Chief Executive Officer of CV Sciences. “We continue to work with the FDA to support market development and ensure CV Sciences is leading the industry in quality and safety. We are confident that FDA regulatory clarity will lead to a ‘flight to quality’ among both retailers and consumers and believe that CV Sciences is best positioned to secure long-term brand loyalty and trust due to our proven track record and relentless focus on quality, safety and regulatory compliance,” Mr. Dowling continued.

As we look towards 2020, we are aggressively adapting to the business environment, working to manage costs while further building distribution and driving innovation. These efforts include a temporary delay of our drug development efforts.

Joseph Dowling, Chief Executive Officer of CV Sciences

We anticipate that the near-term challenges will continue, but we are confident in our ability to navigate the market and align our financial model to the current environment. We remain focused on the long term and are committed to positioning our business to capitalize on the promising future for the hemp-derived CBD market.

Operating Results – Full Year 2019 Compared to Full Year 2018

Sales for 2019 were $53.7 million, an increase of 11% from $48.2 million in 2018. Sales growth reflected the Company’s continued organic expansion into all sales channels, including food drug and mass, natural product retail, specialty retail and direct-to-consumer channels. The second half of 2019 was impacted by increased market competition across all sales channels and the continued impact on retail customers as a result of the uncertain regulatory environment for CBD. The Company’s retail store count increased to 5,567 stores nationwide as of December 31, 2019, up from 2,238 stores as of December 31, 2018.

The Company recognized an operating loss of $17.2 million in 2019, compared to an operating income of $10.2 million in the prior year. The decline in operating income is primarily related to additional stock-based compensation and payroll expense associated with the separation of the Company’s founders of $11.1 million, and additional investment in sales, marketing and R&D activities.

Adjusted EBITDA for 2019 was $0.2 million, compared to $14.0 million in 2018.

Fourth Quarter 2019 – Sales

During the fourth quarter of 2019, sales declined 34% to $9.4 million compared to $14.2 million in the prior year period. Fourth quarter sales were impacted by increased market competition in the natural product category, and the continued impact on retail customers as a result of the uncertain regulatory environment for CBD.

Business Outlook

For the first quarter of fiscal 2020, the Company expects revenue to be in the range of $6 million to $8 million.

Conference Call and Webcast

The Company will host a conference call and webcast to discuss these results today at 4:30 pm EDT/1:30 pm PDT. The webcast of the conference call will be available on the Investor Relations section of the Company’s web site at https://ir.cvsciences.com/news-events and at http://public.viavid.com/index.php?id=138282. Investors interested in participating in the live call can also dial (877) 407-0784 from the U.S., or international callers can dial (201) 689-8560. A telephone replay will be available approximately two hours after the call concludes, and will be available through Monday, March 23, 2020, by dialing (844) 512-2921 from the U.S. or (412) 317-6671 from international locations, and entering confirmation code 13699659.

About CV Sciences, Inc.

CV Sciences, Inc. (CVSI) operates two distinct business segments: a consumer product division focused on manufacturing, marketing and selling plant-based CBD products to a range of market sectors; and a drug development division focused on developing and commercializing CBD-based novel therapeutics utilizing CBD. The Company’s PlusCBD™ Oil products are sold at more than 5,500 retail locations throughout the U.S. and it is the top-selling brand of hemp-derived CBD in the natural product retail market, according to SPINS, the leading provider of syndicated data and insights for the natural, organic and specialty products industry. CV Sciences’ state-of-the-art facility follows all guidelines for Good Manufacturing Practices (GMP) and the Company’s hemp extracts are processed, produced, and tested throughout the manufacturing process to confirm the cannabinoid content meets strict company standards. With a commitment to science, PlusCBD™ Oil’s benefits in healthy people are supported by human clinical research data, in addition to three published clinical case studies available on PubMed.gov. PlusCBD™ Oil was the first hemp CBD supplement brand to invest in the scientific evidence necessary to receive self-affirmed Generally Recognized as Safe (GRAS) status. CV Sciences, Inc. has primary offices and facilities in San Diego, California. Additional information is available from OTCMarkets.com or by visiting www.cvsciences.com.

Contact Information

Investor Contact:
ICR
Scott Van Winkle
617-956-6736
scott.vanwinkle@icrinc.com

Media Contact:
ICR
Cory Ziskind
646-277-1232
cory.ziskind@icrinc.com

Original press release

March 15, 2020
 

You’re reading a copy of this week’s edition of the free New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015.

Sign up to receive a copy in your inbox each Sunday morning.

Friends,

We have been discussing the cannabis industry capital crunch since late September, when the vaping crisis escalated. After this “black swan” event for the industry, we issued a stark warning:

“Very few public companies are generating positive cash flow based on the adjusted operating income column in the Public Cannabis Company Revenue & Income Tracker, and the reduction in capital available is weighing on the entire sector. Companies that have high cash burns and weak balance sheets have seen their stocks fall 80% or more, and investors are realizing that many companies may struggle ahead without raising additional capital on what could be egregious terms… While demand for cannabis stocks is muted, the supply isn’t. We continue to see insiders and early investors selling stock, and we expect that companies may become aggressive in trying to raise capital.”

Of course, even before this week’s stock market crash related to the COVID-19 pandemic, this had been playing out, with several capital raises from those able to do so. Through February, the Global Cannabis Stock Index had declined by more than 25% to begin the year, and it is now down almost 50%. Unfortunately, COVID-19, the second black swan event in six months, could prove to be more fatal to cannabis companies than the vaping crisis. Quite simply, capital has become more scarce overall.

As the broad markets were melting down, Harvest Health and Recreation priced a deal that was 60% below the price at which it was trading in late September. Tilray followed it up with an offering that also included warrants that was priced 82% lower than it was trading in late September. The stocks of both companies, which generate large quarterly operating losses, fell substantially below the deal prices, leaving each of them down in excess of 70% year-to-date.

So, what is an investor to do in this environment? We will repeat what we said in late September:

“While fundamentally sound companies with strong balance sheets and minimal cash burns (or even positive cash flow) are seeing their stocks pressured nonetheless, those that can pursue their plans, even if scaled back due to market conditions, will likely provide big returns to their investors once the storm has passed. We think investors should focus on the companies that are on the path to profitability while they are on sale.”

In the panic, most stocks declined in similar magnitude. This could be a great time to book the tax-loss as one upgrades away from riskier names, where the outlook has just dimmed. The deeply-discounted equity offerings from Harvest and Tilray are likely a harbinger of more stock sales ahead as companies with inadequate capital struggle for survival. At 420 Investor, we have begun to reposition model portfolios further to reflect this dynamic, as we expect the weakest stocks will struggle to rally substantially.

It’s always difficult to tell what’s priced into a stock. 2020 has proven already that oversold stocks can keep dropping substantially. For long-term investors, there are likely to be some great opportunities, but the volatility we are seeing is likely to persist. We think the most important thing now is to understand that many companies aren’t likely to survive without substantial dilution to existing shareholders.

This week, we are surveying our readers to learn what you expect to happen with stocks as measured by the Global Cannabis Stock Index over the balance of the month. We plan to offer more surveys to our subscribers in the future, so stay tuned. Additionally, we would like to sincerely wish our readers well during these turbulent times.



New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:


To get real-time updates download our free mobile app for Android or Apple devices, like our Facebook page, or follow Alan on Twitter. Share and discover industry news with like-minded people on the largest cannabis investor and entrepreneur group on LinkedIn.

Get ahead of the crowd! If you are a cannabis investor and find value in our Sunday newsletters, subscribe to 420 Investor, Alan’s comprehensive stock due diligence platform since 2013. Gain immediate access to real-time and in-depth information and market intelligence about the publicly traded cannabis sector, including daily videos, weekly chats, model portfolios, a community forum and much more.

Use the suite of professionally managed NCV Cannabis Stock Indices to monitor the performance of publicly-traded cannabis companies within the day or over longer time-frames. In addition to the comprehensive Global Cannabis Stock Index, we offer a family of indices to track Canadian licensed producers as well as the American Cannabis Operator Index.

View the Public Cannabis Company Revenue & Income Tracker, which ranks the top revenue producing cannabis stocks that generate industry sales of more than US$7.5M per quarter.

Stay on top of some of the most important communications from public companies by viewing upcoming cannabis investor earnings conference calls.

Discover upcoming new listings with the curated Cannabis Stock IPOs and New Issues Tracker.

Sincerely,

Alan & Joel

March 14, 2020
 
Marijuana retailers, vape product suppliers and MJ industry conferences and trade shows are among the cannabis businesses dealing with challenges related to coronavirus
March 13, 2020
 
Marijuana retailers are seeing customers stocking up on products as the coronavirus spreads across the United States. Stores also are implementing extra precautions to keep both customers and employees safe
March 13, 2020
 
From South by Southwest in Austin, Texas to Spannabis in Spain, at least 15 conferences with ties to the cannabis industry have been postponed, cancelled or rescheduled amidst the coronavirus pandemic
March 13, 2020
 
Coronavirus dominated global headlines, including for the cannabis industry
March 11, 2020
 

Innovative Industrial Properties Acquires Florida Property and Enters Into Long-Term Lease with Parallel, a U.S. Cannabis Company

SAN DIEGO, March 11, 2020–(BUSINESS WIRE)–Innovative Industrial Properties, Inc. (IIP), the first and only real estate company on the New York Stock Exchange (NYSE: IIPR) focused on the regulated U.S. cannabis industry, announced today that it closed on the acquisition of a property in Wimauma, Florida, which comprises approximately 373,000 square feet of industrial and greenhouse space, from an affiliate of Parallel, a leading multi-state cannabis company with operations in Florida, Massachusetts, Nevada and Texas. Parallel is the corporate parent company to Surterra Wellness, a market leader and one of the original licensed vertical operators in Florida, with a rapidly growing footprint that includes 39 retail dispensaries across the state and multiple industrial-scale cultivation, production and research facilities.

The purchase price for the property was $35.3 million (excluding transaction costs). Concurrent with the closing of the purchase, IIP entered into a long-term, triple-net lease agreement for the property with a subsidiary of Parallel, which intends to continue to operate the property as a regulated medical cannabis cultivation and processing facility. Parallel is expected to complete additional tenant improvements for the property, for which IIP has agreed to provide reimbursement of up to $8.2 million. Assuming full reimbursement for the tenant improvements, IIP’s total investment in the property will be $43.5 million.

As the pioneering real estate investment trust (REIT) for the medical-use cannabis industry, IIP partners with experienced medical-use cannabis operators and serves as a source of capital by acquiring and leasing back their real estate assets, in addition to offering other creative real estate-based capital solutions.

We are thrilled to execute this transaction with Parallel, and look forward to supporting Parallel as their long-term real estate capital partner in Florida and elsewhere.

Paul Smithers, President and Chief Executive Officer of IIP

Parallel has a tremendous footprint in Florida with its 39 operating dispensary locations, and we expect the Wimauma facility to be a critical catalyst to Parallel’s continued growth and expansion of operations to meet the tremendous patient need for high quality medical cannabis products throughout Florida.

Parallel is one of the largest privately-held multi-state cannabis operators in the U.S., with leading positions in several of the largest and fastest-growing markets, including Florida, Massachusetts, Nevada and Texas. Parallel’s operations include 42 retail dispensaries, a robust portfolio of proprietary consumer brands and innovative products, and state-of-the-art cultivation, production and research facilities. Parallel has over 1,700 employees nationwide, and has raised more than $300 million in capital to date. Parallel’s highly accomplished management team is led by Chairman and CEO William “Beau” Wrigley, Jr., who previously served as the Chairman and CEO of global gum and confectionery leader the Wm. Wrigley Jr. Company, which was acquired by Mars, Inc. in 2008 for $23 billion.

We are thrilled to partner with IIP on this transaction, which enables Parallel to unlock previously untapped sources of growth capital from our real estate holdings to help drive our continued expansion in Florida as well as in other markets.

Beau Wrigley, Jr., Chairman and CEO of Parallel

As the premier real estate capital provider for the cannabis space, IIP is best positioned to support Parallel’s continued growth to enable us to continue to meet our customers’ needs by delivering a wide variety of consistent, high-quality cannabis products.

Florida represents one of the largest and one of the fastest growing medical-use cannabis markets in the United States. Floridians overwhelmingly supported the passage of the medical-use cannabis program in 2016 with 71% voter approval. Qualifying medical conditions for the program include, among others, cancer, epilepsy, PTSD, HIV/AIDS and multiple sclerosis. According to the Florida Office of Medical Marijuana Use (OMMU), as of March 6, 2020, there were over 320,000 qualified patients and over 2,500 qualified physicians in the medical-use cannabis program.

As of March 11, 2020, IIP owned 53 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New York, Nevada, North Dakota, Ohio, Pennsylvania and Virginia, totaling approximately 3.8 million rentable square feet (including approximately 1.1 million rentable square feet under development/redevelopment), which were 99.1% leased (based on square footage) with a weighted-average remaining lease term of approximately 15.9 years. As of March 11, 2020, IIP had invested approximately $611.0 million in the aggregate (excluding transaction costs) and had committed an additional approximately $168.6 million to reimburse certain tenants and sellers for completion of construction and tenant improvements at IIP’s properties. IIP’s average current yield on invested capital is approximately 13.2% for these 53 properties, calculated as (a) the sum of the current base rents, supplemental rent (with respect to the lease with a tenant at one of IIP’s New York properties) and property management fees (after the expiration of applicable base rent abatement or deferral periods), divided by (b) IIP’s aggregate investment in these properties (excluding transaction costs and including aggregate potential development/redevelopment funding and tenant reimbursements of approximately $168.6 million). These statistics do not include up to approximately $15.9 million that may be funded in the future pursuant to IIP’s lease with a tenant at one of IIP’s Illinois properties, or the approximately $35.7 million that may be funded in the future pursuant to IIP’s lease with a tenant at one of IIP’s Massachusetts properties, as the tenants at those properties may not elect to have IIP disburse those funds to them and pay IIP the corresponding base rent on those funds. These statistics also treat IIP’s Los Angeles, California property as not leased, due to the tenant’s ongoing default in its obligation to pay rent at that location.

About Innovative Industrial Properties

Innovative Industrial Properties, Inc. is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities. Innovative Industrial Properties, Inc. has elected to be taxed as a real estate investment trust, commencing with the year ended December 31, 2017. Additional information is available at www.innovativeindustrialproperties.com.

About Parallel

Parallel (formerly Surterra Wellness) is a leading global company that is pioneering human well-being and improving quality of life for humanity through the benefits of cannabinoids. Parallel is one of the fastest growing cannabis companies in the world with vertical operations in Florida, Texas, Nevada, and Massachusetts, a developing international footprint in the European Union (EU), South America and Asia, a global retail brand, Goodblend, and a diverse portfolio of high quality, proprietary consumer brands, including Surterra Wellness, Coral Reefer, Endless Summer, and Float. Parallel’s business also includes Massachusetts’ New England Treatment Access (NETA), a leading vertical cannabis operation with regional retail dispensaries and consumer brands; Molecular Infusions (Mi), a cannabis based biopharmaceutical company; and Nevada’s The Apothecary Shoppe, a vertical cannabis dispensary. Parallel’s integrated footprint includes 42 retail dispensaries across the United States (US), including 39 in Florida, cultivation and manufacturing operations across the platform, R&D facilities in Massachusetts, Florida, and Budapest, Hungary, and an exclusive partnership with global biotechnology company Intrexon to drive its science and technology-led innovation. Parallel follows rigorous operational and business practices to ensure the quality, safety, consistency and efficacy of its products, and is building a business based on strong values to be the gold standard for the industry. For more information: www.liveParallel.com.

Original press release

March 10, 2020
 
The San Antonio Express News writes...San Antonio drug counselor Melanie Farr early last year started taking CBD oil to help with her multiple sclerosis.
March 09, 2020
 

The campaign is designed to engage Minnesotans and advocate for the addition of dry flower to the state’s medical cannabis program

MINNEAPOLIS, March 9, 2020 /PRNewswire/ — Minnesota Medical Solutions, LLC (“MinnMed” or “the Company”) today announced the launch of a digital advocacy campaign to engage Minnesotans and gain support among lawmakers to add dry flower products to the state’s medical cannabis program. By adding dry flower cannabis products, Minnesota can increase the accessibility and affordability of medical cannabis products for thousands of Minnesotans.

“While Minnesota’s medical cannabis program has seen tremendous advancements over the last few years, affordability remains a major challenge for many Minnesotans,” said MinnMed Founder, Kyle Kingsley, M.D. “Allowing cannabis to be sold as dry flower is an easy decision that will bring great benefit to Minnesota’s medical cannabis program and its patients.”

Of the 33 states that have legalized medical cannabis, Minnesota is one of the few that does not allow dry flower medical cannabis. For the more than 18,000 certified patients enrolled in the program, the lack of availability of flower has meant Minnesota patients face some of the highest medical cannabis costs in the nation – a cost that cannot be covered by medical insurance.

We’re proud to be a leading voice in advocating for improvements to the state’s medical cannabis program.

MinnMed Founder, Kyle Kingsley, M.D.

We are asking our patients and their families to join us in taking action to get dry flower added to the state’s program by writing or calling their legislators.

Interested advocates can learn more about MinnMed’s campaign and quickly send emails, texts, or social posts to their legislators by visiting https://minnesotamedicalsolutions.com/advocacy/

About Minnesota Medical Solutions

Minnesota Medical Solutions, LLC (“MinnMed”) is one of two licensed medical cannabis companies in Minnesota. MinnMed operates four Cannabis Patient Centers across the state and a greenhouse facility near Otsego, MN. MinnMed is a subsidiary of Vireo Health International, Inc. (“Vireo”). Vireo’s mission is to build the cannabis company of the future by bringing the best of medicine, engineering and science to the cannabis industry. Vireo’s physician-led team of more than 400 employees provides best-in-class cannabis products and customer experience. For more information about MinnMed, please visit www.minnmed.com.

Contact Information

Media Inquiries
Albe Zakes
Vice President, Corporate Communications
albezakes@vireohealth.com
(267) 221-4800

Original press release

March 08, 2020
 

You’re reading a copy of this week’s edition of the free New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015.

Sign up to receive a copy in your inbox each Sunday morning.

Friends,

This week’s announcement from Canopy Growth regarding asset impairments of up to C$800 million should come as no surprise to readers of New Cannabis Ventures, as we discussed this four weeks ago (More Asset Impairments Ahead). Although Canopy didn’t announce write-downs when it reported on February 14th, new CEO David Klein made it clear that the company would be restructuring when he discussed his third priority during the conference call that day, saying that “mindful of future market growth, we’re prepared to take initial steps to rightsize our business over the next 90 days.”

While the company moved much more swiftly, announcing that it is closing its BC greenhouse facilities and taking other undefined actions that will be detailed in May, when the company reports its fiscal Q4, investors seemed to be caught off-guard, with the stock losing 19% of its value during the week. We see the announcement as generally positive for the industry, but it also highlights balance sheet risk, as some assets have been carried at values in excess of their true worth.

Implications for Canada

Rationalization of supply is now a requirement for the industry, which needs to drastically improve cash flow across the board to regain investor confidence. Closing production facilities will improve financial results going forward, but it will also help address present or future oversupply across the board.

We found it interesting that Canopy specifically cited outdoor cultivation as a reason for abandoning the two operating greenhouses in BC and an Ontario greenhouse under development. Aurora cannabis has put a greenhouse it acquired when it purchased MedReleaf for sale, and we wonder if more greenhouse operators will arrive at the same conclusion as management at Canopy. So far, data has been limited regarding outdoor grows, but they don’t yet appear to be a major factor.

While rightsizing is largely a step in the right direction, we are concerned that some companies that have substantial debt could trigger covenants and that debt may be harder to access if asset values are in question.

Why America is Different

The situation is quite different in America, where few states are oversupplied at present. In those states, like Oregon, there is very little participation by public companies. With capital access historically more challenging, it has been much more difficult to invest heavily in production, which has created shortages in many states, like Pennsylvania and Florida. For well-capitalized companies in the U.S., we expect very few write-downs. At the same time, though, struggling players who are spread too thin across multiple state markets may exit those markets, similar to what we saw with MedMen in Arizona, a process that consequently could result in write-downs for those companies.

As we concluded a month ago, asset impairments could weigh on market sentiment, but they are a lagging indicator, reflective of poor decisions from the past. The more quickly companies rightsize, the more quickly the industry can improve its profitability.


While the media doesn’t focus upon it as much as its larger peers, Organigram has been described by the analysts at Jefferies as not trying to be “all things to everyone”. It has instead shown an ability to focus, execute and sustain itself. The company has approached Cannabis 2.0 with a rifle rather than a shotgun approach, with an emphasis on vape and chocolates, and has invested in automation and processes to keep its costs down. Organigram also has a novel product for the beverage market that it will introduce later this year, a powder than consumers can add to any beverage.

Get up to speed by visiting the Organigram Investor Dashboard that we maintain on their behalf as a client of New Cannabis Ventures. Click the blue Follow Company button in order to stay up to date with their progress.


New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:


To get real-time updates download our free mobile app for Android or Apple devices, like our Facebook page, or follow Alan on Twitter. Share and discover industry news with like-minded people on the largest cannabis investor and entrepreneur group on LinkedIn.

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View the Public Cannabis Company Revenue & Income Tracker, which ranks the top revenue producing cannabis stocks that generate industry sales of more than US$7.5M per quarter.

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Sincerely,

Alan & Joel

March 07, 2020
 
This week’s United Nations Commission on Narcotic Drugs meeting in Vienna indicated how divided nations are over the World Health Organization's cannabis scheduling recommendations
March 06, 2020
 
Three more cannabis-related conferences have been canceled or postponed, including this month's massive South by Southwest (SXSW) event in Austin, Texas, because of the coronavirus outbreak
March 06, 2020
 
Multistate marijuana operator Harvest Health and Recreation must pay a $500,000 settlement to settle a social equity misrepresentation charge from Ohio regulators, before it can open three medical marijuana dispensaries in the state
March 05, 2020
 
Arkansas is back in the business of licensing medical marijuana dispensaries after a Pulaski County circuit judge ruled Tuesday that a former dispensary applicant, Medicanna of Pine Bluff, has no grounds to challenge licensing procedure. Reports Arkansas online.
March 04, 2020
 
Three Senate commissions in Mexico acting together passed legislation on Wednesday to legalize all forms of cannabis, bringing the Latin American county one step closer to launching the world's largest adult-use program by population
March 04, 2020
 
Canopy Growth, one of the world’s biggest cannabis producers, announced the closure of two British Columbia greenhouses, in Aldergrove and Delta
March 03, 2020
 

Justin Dye, CEO and Chairman, Discussed Positive Progress Made on Announced Acquisitions to Create the Largest Vertically Integrated Operation in Colorado

DENVER, March 3, 2020–(BUSINESS WIRE)–Medicine Man Technologies Inc. (OTCQX: MDCL) recently attended and presented at the Benzinga Cannabis Capital Conference in Miami Beach, Florida. On day two of the conference, Justin Dye, Chief Executive Officer, presented to a full room of conference attendees an update of the growth strategy and how the Company is progressing on the closings of the pending acquisitions.

Medicine Man Technologies is a rapidly growing provider of cannabis consulting services, nutrients, and supplies. In response to the legislative change with Colorado House Bill 19-1090, the Company entered into agreements with 11 premier cannabis operators across the state of Colorado to become one of the largest vertically integrated seed-to-sale operators in the global cannabis industry. Once complete, these agreements will enable Medicine Man Technologies to offer:

  • cultivation capabilities at 13 indoor, greenhouse and outdoor facilities totaling 2.1M growing square feet,
  • extraction and production capabilities at five facilities totaling 23,000 manufacturing square feet,
  • 34 dispensary operations totaling 64,000 retail square feet, and
  • product development and innovation.

“For the past couple of months, we have had our heads down focused on building a strong, agile infrastructure to support our growth initiatives. As such, we have been intentionally quiet during this time and decided Benzinga Cannabis Capital Conference would be a good time to share where we are as a company,” said Justin Dye, Chief Executive Officer. “I am pleased to report that we are on a solid path and scheduled to become the largest cannabis operator in the great state of Colorado. Since joining the Company as CEO in December, we have been laser focused on finalizing diligence and integration planning with our acquisition partners, deploying our company operating playbook and implementing our new enterprise ERP platform.”

We are building a company that is based on fundamentals, operating excellence, and driving sustainable EBITDA, which never goes out of style. I am energized by not only our progress but also by the team’s high-level and thoughtful execution, which is the expectation. We are grateful for the opportunity to make a positive difference in people’s lives and continue to be excited about our future.

Justin Dye, Chief Executive Officer

To learn more about the company and where it is heading, please view the new Investor Presentation on the Company’s website https://ir.MedicineManTechnologies.com/. For more information about Medicine Man Technologies, please visit https://www.MedicineManTechnologies.com/.

About Medicine Man Technologies

Denver, Colorado-based Medicine Man Technologies (OTCQX: MDCL) is a rapidly growing provider of cannabis consulting services, nutrients, and supplies. The Company’s client portfolio includes active and past clients throughout the cannabis industry in 20 states and seven countries. The Company has entered into agreements to become one of the largest vertically integrated seed-to-sale operators in the global cannabis industry. Current agreements will enable Medicine Man Technologies to offer cultivation, extraction, distribution and retail pharma-grade products. Management includes decades of cannabis experience, a unique combination of first movers in industrial cannabis and proven Fortune 500 corporate executives.

Original press release

March 03, 2020
 

Village Farms International and Emerald Health Therapeutics Announce Settlement Agreement – Village Farms To Own 57.4% of Pure Sunfarms

VANCOUVER, March 3, 2020 /PRNewswire/ – Village Farms International, Inc. (“Village Farms” or the “Company”) (TSX: VFF;NASDAQ: VFF) and Emerald Health Therapeutics (TSXV: EMH;OTCQX: EMHTF) (“Emerald”) today announced that they have entered into a settlement agreement in order to settle all outstanding disputes with respect to their joint venture for large-scale, low-cost, high-quality cannabis production, Pure Sunfarms Corp (“Pure Sunfarms”). Under the terms of the settlement agreement:

  • The 5,940,000 common shares of Pure Sunfarms that were placed in escrow pending Emerald’s C$5.94 million equity contribution to Pure Sunfarms (originally due in November 2019) will be cancelled, effective as of November 19, 2019, and Village Farms and Emerald will cease arbitration proceedings on the matter;
  • Emerald will forfeit and waive repayment by Pure Sunfarms of its outstanding C$13.0 million shareholder loan to Pure Sunfarms (plus accrued interest of C$1.1 million) and Emerald will issue a promissory note to Pure Sunfarms in the amount of C$952,237;
  • Pure Sunfarms will release Emerald from all liability arising from their supply agreement under which Emerald had the provision to purchase 40% of Pure Sunfarms’ aggregate production in 2018 and 2019;
  • Emerald will transfer 2.5% of additional equity in Pure Sunfarms to Village Farms;
  • Pure Sunfarms and Emerald will release each other from their current supply agreement under which Emerald has the provision to purchase 25% of Pure Sunfarms’ aggregate cannabis production from the Delta facilities in 2020, 2021 and 2022; and
  • Village Farms and Emerald will mutually release each other from all claims related to or arising from the disputes.

The net impact of the settlement on the ownership of Pure Sunfarms, as agreed to by both Village Farms and Emerald, will be that as of December 31, 2019, Village Farms will have owned 53.5% of Pure Sunfarms and Emerald will have owned 46.5% of Pure Sunfarms.

In addition, Village Farms has made an additional equity contribution to Pure Sunfarms of C$8.0 million in 2020. In accordance with the terms of the settlement agreement, Emerald has agreed that Village Farms will receive additional shares in Pure Sunfarms to reflect this additional equity contribution (the “New PSF Shares”). Upon closing of the transactions contemplated in the settlement agreement, including the treasury issuance of the New PSF Shares, Village Farms will own 57.4% of Pure Sunfarms.

Upon closing of the transactions contemplated by the settlement agreement, Pure Sunfarms will recognize C$8.1 million in sales (resulting in C$8.1 million in EBITDA) in 2019 generated by its previous supply agreement with Emerald that it was previously unable to recognize. Any incremental financial impact will be recognized by Pure Sunfarms in the first quarter of 2020.

In accordance with the settlement agreement, the parties have agreed to use reasonable commercial efforts to deliver the requisite closing documents as soon as reasonably practicable and in any event on or before March 6, 2020. In the event that the closing of the settlement transactions does not occur on or before March 31, 2020, the settlement agreement will terminate and will be void in its entirety, except with respect to the issuance of the New PSF Shares which will survive such termination. Although Village Farms expects the settlement transactions to close as described herein, no assurance can be given that such transactions will ultimately close.

Non-IFRS Measures

References in this press release to “EBITDA” are to earnings before interest, taxes, depreciation, amortization, foreign currency exchange gains and losses on translation of long-term debt, unrealized gains on the changes in the value of derivative instruments, unrealized change in biological asset, stock compensation, and gains and losses on asset sales.  EBITDA is a cash flow measure that is not recognized under International Financial Reporting Standards (“IFRS”) and does not have a standardized meaning prescribed by IFRS. Therefore, EBITDA may not be comparable to similar measures presented by other issuers. Investors are cautioned that EBITDA should not be construed as an alternative to net income or loss determined in accordance with IFRS as an indicator of the Company’s performance or to cash flows from operating, investing and financing activities as measures of liquidity and cash flows. Management believes that EBITDA is an important measure in evaluating the historical performance of the Company.

About Village Farms International, Inc.

Village Farms is one of the largest and longest-operating vertically integrated greenhouse growers in North America and the only publicly traded greenhouse produce company in Canada. Village Farms produces and distributes fresh, premium-quality produce with consistency 365 days a year to national grocers in the U.S. and Canada from more than nine million square feet of Controlled Environment Agriculture (CEA) greenhouses in British Columbia and Texas, as well as from its partner greenhouses in British Columbia, Ontario and Mexico.  The Company is now leveraging its 30 years of experience as a vertically integrated grower for the rapidly emerging global cannabis opportunity through its majority ownership of British Columbia-based Pure Sunfarms Corp., one of the single largest cannabis growing operations in the world.  The Company also intends to pursue opportunities to become a vertically integrated leader in the U.S. hemp-derived CBD market, subject to compliance with all applicable U.S. federal and state laws, Village Farms has established two joint ventures, Village Fields Hemp and Arkansas Valley Green and Gold Hemp, for outdoor hemp cultivation and CBD extraction and is pursuing controlled environment hemp production at a portion of its Texas greenhouse operations, which total 5.7 million square feet of production area.

Original press release

March 03, 2020
 

CHICAGO-March 03, 2020-(BUSINESS WIRE)–Cresco Labs Inc. (CSE:CL)(OTC:CRLBF) (“Cresco Labs” or “the Company”), one of the largest vertically integrated multistate cannabis operators in the United States, today announced that Joe Caltabiano has advised the Company of his decision to resign from the position of President effective immediately.

Mr. Caltabiano’s management responsibilities will be taken up by CEO and Co-founder Charlie Bachtell as well as other members of the Company’s recently strengthened leadership team. The Company wishes Joe well on his future endeavors and looks forward to continuing its path to building the most important company in cannabis.

About Cresco Labs:

Cresco Labs is one of the largest vertically-integrated multi-state cannabis operators in the United States. Cresco is built to become the most important company in the cannabis industry by combining the most strategic geographic footprint with one of the leading distribution platforms in North America. Employing a consumer-packaged goods (“CPG”) approach to cannabis, Cresco’s house of brands is designed to meet the needs of all consumer segments and includes some of the most recognized and trusted national brands including Cresco, Remedi and Mindy’s, a line of edibles created by James Beard Award-winning chef Mindy Segal. Sunnyside*, Cresco’s national dispensary brand is a wellness-focused retailer designed to build trust, education and convenience for both existing and new cannabis consumers. Recognizing that the cannabis industry is poised to become one of the leading job creators in the country, Cresco has launched the industry’s first national comprehensive Social Equity and Educational Development (SEED) initiative designed to ensure that all members of society have the skills, knowledge and opportunity to work in and own businesses in the cannabis industry. Learn more about Cresco Labs at www.crescolabs.com.

Original Press Release

March 02, 2020
 
Tilray, Inc. Reports Fourth Quarter and Full Fiscal Year 2019 Financial Results

Revenue Increased 287% to $167.0 (C$217.4) Million in Full Fiscal Year 2019 Compared to the Prior Year

Adult-Use Revenue Increased Over Three-Fold in the Fourth Quarter Compared to the Prior Year Period; 7% Sequential Quarterly Revenue Growth

Signed and Closed $60 Million Senior Credit Facility

NANAIMO, British Columbia, March 02, 2020–(BUSINESS WIRE)–Tilray, Inc. (“Tilray” or the “Company”) (Nasdaq: TLRY), a global pioneer in cannabis production, research, cultivation and distribution, reports financial results for the fourth quarter and full fiscal year ended December 31, 2019. All financial information in this press release is reported in U.S. dollars, unless otherwise indicated.

Our full year results demonstrate strong sales growth momentum, which we expect to continue in 2020. Like our peers, we have faced industry challenges, but we remain committed to driving long-term value for our shareholders.

Brendan Kennedy, Tilray’s Chief Executive Officer

Tilray has a diversified business model comprised of global medical, Canada adult-use and hemp products which positions us well in the current volatile market environment. We are still in the early days of this emerging growth industry and will continue being good stewards of shareholder capital as we aim to build the world’s most trusted and valued cannabis and hemp company.

2019 Financial Highlights

  • Revenue increased to $167.0 (C$217.4) million, up 287.2% compared to last year. The increase in revenue was driven by significant growth in sales for the Canadian adult-use market, international medical markets as well as the acquisition of Manitoba Harvest.

  • Total cannabis kilogram equivalents sold increased over 446% to 35,380 kilograms from 6,478 kilograms in the prior year.
  • Average cannabis net selling price per gram (excluding bulk sales) increased to $7.90 (C$10.28) compared to $6.63 (C$8.63) in the prior year.
  • Net loss for the year was $321.2 million, or $3.20 per share, compared to $67.7 million, or $0.82 per share, for 2018. In 2019, the Company recorded non-cash charges of $112.1 million related to impairment of the Authentic Brands Group LLC (“ABG”) agreement as well as $68.6 million in inventory reserves. Adjusted EBITDA was a loss of $89.8 million compared to a loss of $28.3 million the prior year.

Fourth Quarter 2019 Financial Highlights

  • Revenue increased 202.2% to $46.9 million (C$61.0 million), compared to the fourth quarter of last year, driven by the Canadian adult-use market, the Manitoba Harvest acquisition, and growth in international medical markets. The Company recorded reserves of $4.2 million related to discounts and returns.

  • Total cannabis kilogram equivalents sold increased over seven-fold to 15,039 kilograms from 2,053 kilograms in the prior year period.
  • Average cannabis net selling price per gram (excluding bulk sales) increased to $8.78 (C$11.43) compared to $7.52 (C$9.79) in the prior year period. The average net selling price excluding excise taxes for adult-use was $3.19 (C$4.16) per gram for the fourth quarter of 2019. The increase was due to a shift in product and channel mix.
  • Gross margin, excluding non-cash return and inventory reserves, decreased sequentially to 29% from 31% in the prior quarter and increased compared to the fourth quarter of 2018 gross margin of 20%. Including non-cash charges, gross margin in the fourth quarter of 2019 was negative 120%.
  • Net loss for the quarter was $219.1 million or $2.14 per share compared to a loss of $31.0 million or $0.33 per share for the prior year period. Adjusted EBITDA was a loss of $35.3 million compared to a loss of $13.3 million in the prior year period. The increased net loss and Adjusted EBITDA declines were primarily due to increases in operating expenses related to growth initiatives, expansion of international teams, and the addition of Manitoba Harvest and Natura Naturals businesses.

Senior Credit Facility

The Company closed a $60 million senior credit facility on February 28, 2020 that bears interest at prime plus 8% and has a two year term. The Company ended 2019 with $97 million in cash.

2019 Business Highlights

  • Canadian adult-use brand portfolio expansion:
    • High Park™, a subsidiary of Tilray, launched the second phase of its adult-use product portfolio including vape, edible and beverage products, across Canada where regulations allow. New brand and product additions include:
      • Canaca – pure cannabis oil, all-in-one vape pens and cartridges;
      • Marley Natural – pure cannabis oil vape cartridges;
      • Chowie Wowie – cannabis-infused chocolates and gummies in THC and CBD varieties;
      • Everie – non-alcoholic, CBD-infused ready-to-brew teas and sparkling beverages with all natural flavors. Everie is the debut brand for Fluent, Tilray’s joint venture with AB InBev, facilitated through High Park and Labatt Breweries of Canada.
  • Addition of Hemp products business:
    • Tilray completed its acquisition of Manitoba Harvest. The Company now has hemp products available in over 17,000 retail doors and 20 countries around the world.
  • Key international market developments:
    • Tilray Portugal received two Good Manufacturing Practice (GMP) certifications in accordance with European Union standards, for its manufacturing facility in Cantanhede, Portugal. These certifications permit the Company to manufacture and export GMP-certified bulk and finished medical cannabis products, including dried flower and oils, from Portugal to Germany and other European and international markets with legal medical cannabis regulations. Tilray remains the only licensed producer to be GMP certified in two countries, Canada and Portugal.
    • Successfully resupplied a bulk amount of medical cannabis in the U.K. and exported medical cannabis to Ireland.
    • Successfully exported medical cannabis to Germany and Israel from Portugal, and to Switzerland from Germany. In total, Tilray’s medical cannabis products have been made available in 15 countries on 5 continents across the world.
  • Executive leadership team expansion:
    • Jon Levin, formerly of Revlon, joined the Company as Chief Operating Officer.
    • Michael Kruteck, formerly of Molson Coors and Pharmaca, joined the Company as Chief Financial Officer. Mark Castaneda, the Company’s Chief Financial Officer, will transition to a strategic business development role after the 10-K has been filed for the fiscal year ended December 31, 2019.¹
    • Katy Dickson, formerly of Mattel and General Mills, joined the Company as President of Manitoba Harvest.
  • Clinical research developments:
    • Imported medical cannabis into the United States from Canada for a new clinical trial evaluating the efficacy of medical cannabis as a treatment for taxane-induced peripheral neuropathy (TIPN) secondary to treatment with paclitaxel or docetaxel. TIPN affects more than 67% of women undergoing breast cancer treatment.
    • Announced support for additional global clinical trials; studying the efficacy of medical cannabis as treatment in reducing severe behavioral problems in children with intellectual disabilities; and another trial examining the safety, tolerability and effectiveness of medical cannabis on immune activation in people living with HIV.
  • Tilray closed its merger with Privateer Holdings, Inc. in December.

__________
¹ Announced January 14, 2020

Conference Call

The Company will host a conference call to discuss these results today at 5:00 p.m. ET. Investors interested in participating in the live call can dial 877-489-6528 from the U.S. and 629-228-0736 internationally. A telephone replay will be available approximately two hours after the call concludes through Monday, March 16, 2020, by dialing 855-859-2056 from the U.S., or 404-537-3406 from international locations, and entering confirmation code 8197352.

There will also be a simultaneous, live webcast available on the Investors section of the Company’s website at www.tilray.com. The webcast will be archived for 30 days.

About Tilray®

Tilray (Nasdaq: TLRY) is a global pioneer in the research, cultivation, production and distribution of cannabis and cannabinoids currently serving tens of thousands of patients and consumers in 15 countries spanning five continents.

Use of Non-U.S. GAAP Financial Measures

To supplement its financial statements, the Company provides investors with information related to Adjusted EBITDA, which is not a financial measure calculated in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). Adjusted EBITDA is calculated as net income (loss) before inventory valuation adjustments; interest expenses, net; other income, net; deferred income tax (recoveries) expenses, current income tax expenses; foreign exchange gain (loss), net; depreciation and amortization expenses; stock-based compensation expenses; other stock-based compensation related expenses; loss from equity method investments; finance income from ABG; loss on disposal of property and equipment; acquisition-related (income) expense; and amortization of inventory step-up. A reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP measure, has been provided in the financial statement tables included below in this press release. The Company believes Adjusted EBITDA provides useful information to management and investors regarding certain financial and business trends relating to the Company’s financial condition and results of operations. Management uses Adjusted EBITDA to compare the Company’s performance to that of prior periods for trend analyses and planning purposes. Adjusted EBITDA is also presented to the Company’s Board of Directors.

Non-U.S. GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with U.S. GAAP. Non-U.S. GAAP measures exclude significant expenses that are required by U.S. GAAP to be recorded in the Company’s financial statements and are subject to inherent limitations.

Original press release

March 02, 2020
 

After breaking an 8-month losing streak in December with a strong close on the last day of the year, the Global Cannabis Stock Index extended its January losses with a 21.5% decline during February, ending at 31.41:

The index, which had 41 qualifying members during the month following the quarterly rebalancing at the end of December, declined 34.1% in 2019 to 42.20 and is now down 25.6% in 2020:

After posting an all-time closing low of 31.09 set on February 27th, the index rallied to end the month down almost 83% from its early 2018 closing high at 180.02:

4 names gained more than 16% during February:

Sundial Growers, a Canadian LP which went public in August at $13, plunged to an all-time low near $1 following the departure of its CEO and its COO in January, when it posted a 60% decline, the worst in the index. This month, it recovered some of its losses, climbing 18%. GrowGeneration matched its 16% January jump with another 16% gain in February. The company expanded into Florida, its 10th state, with an acquisition that it believes will add $12 million per year in revenue. Planet 13 Holdings rallied late in the month to gain 6%. During the first week of February, it reported that January revenue set a record. Innovative Industrial Properties extended upon its 18% gain in January, rising 3% in February. The company reported revenue and AFFO per diluted share that were substantially higher than analyst estimates.

4 names fell by more than 25% during February:

KushCo Holdings, which led the index in January with a gain of 26%, lost 48% in February after it priced an equity offering and as concerns mounted surrounding the potential for its supply chain to experience disruptions due to coronavirus. MedMen continued to be pressured by concerns over its financial health, losing 46% during the month as it reported 11% sequential growth in revenue during fiscal Q2 with little progress in addressing its operating losses. The company announced that it will be focusing solely on retail going forward. Vireo Health began the year with a 10% gain but lost 46% in February. Pyxus International plunged to an all-time low after reporting its fiscal Q3, with declining tobacco revenue and mounting losses in its cannabis, hemp and e-liquids business triggering concern about how it will address its substantial debt that is due in 2021.

We have also published separate reviews of the performance of the Canadian LP Index and the American Cannabis Operators Index:

We will summarize the index performance again in a month. You can learn more about the index members and the qualifications for inclusion by visiting the Global Cannabis Stock Index. A more complete analysis of the index is available at 420Investor.com. Be sure to bookmark the page to stay current on cannabis stock price movements within the day or from day-to-day.

New Cannabis Ventures maintains six proprietary indices designed to help investors monitor the publicly-traded cannabis stocks, including the Global Cannabis Stock Index as well as the Canadian Cannabis LP Index and its three sub-indices. The sixth index, the American Cannabis Operator Index, was launched at the end of October last year and tracks the leading cultivators, processors and retailers of cannabis in the United States.

March 02, 2020
 

Exclusive Interview with Organigram CEO Greg Engel

In 2018, Organigram (NASDAQ: OGI) (TSX: OGI) CEO Greg Engel spoke with New Cannabis Ventures about creating a company culture of quality. Two years later, the cannabis operator is differentiating itself through a focus on high-quality production at low costs. Engel checked in with New Cannabis Ventures to discuss Organigram’s investment innovation, its Moncton facility and various approaches to funding.  The audio of the entire conversation is available at the end of this written summary.

The Growing Organigram Team

Organigram’s team has evolved through a combination of new talent and the growth of existing players. Engel highlighted important members including Senior Vice President of Sales Tim Emberg, Vice President of Public Affairs and Stakeholder Relations Cameron Bishop, Vice President of Operations Matt Rogers, and Senior Vice President of Marketing and Communications Ray Gracewood.

Emberg has experience in healthcare and consumer packaged goods. Bishop spearheads the company’s evaluation of potential new markets. Rogers, formerly with a leading chocolate company, grew with Organigram to step into his VP role. Gracewood brings his experience from the beverage and alcohol industry.

The Moncton Facility

Organigram operates out of its Moncton, New Brunswick facility. It has gone through a number of expansions–eventually, it will be fully completed at 550,000 square feet. Here, the company has indoor production on three levels. The fifth expansion phase focuses on the facility’s processing area, designed for EU GMP certification.

Organigram Uses a Three-Tiered Growth System in Its Facility.

Organigram is in the top three to five operators in most of its Canadian markets, according to Engel. And, he sees plenty of growth opportunity with the rollout of cannabis 2.0 products.

Cannabis 2.0 Products

Organigram recognizes the importance of vape products, and the company has a number of partnerships in this category. The company has a 510 cartridge in the market with the brand Trailblazer, a partnership with Colorado company The Green Solution, an exclusive agreement with vape technology company Feather and a brand partnership with PAX.

Additionally, Organigram has a dried powder formulation that can be added to beverages. Designed for fast onset time (10 to 15 minutes), this product has medical and recreational applications, according to Engel.

The company has also invested $50 million in a production line for its premium chocolate products. In an eight-hour shift, Organigram is capable of producing 50,000 to 60,000 of its Edison Bytes.

Organigram is Investing in Its Premium Chocolate Products.

As a part of its focus on edible and derivative products, Organigram is investing in automation to process, package, and distribute its products and keep its costs down, according to Engel.

Package Labeling Equipment at the Organigram Facility

International Opportunities

In addition to its Canadian markets, Organigram is active in and considering other international markets. It has an investment in a German cannabis company, and it has an export agreement with an Australian company. When its facility receives EU GMP certification, the company will have more opportunities to export to European markets with medical cannabis markets.

Organigram will only operate in countries with federal legality. Right now, it is watching the U.S. market, particularly on the CBD side, and optimistically waiting for further guidance to present opportunities in that market, according to Engel.

Industry Investments and Partnerships

Biosynthesis has been a growing topic of interest in the cannabis space. Organigram is one of the early movers, making an investment biosynthesis company Hyasynth Bio two years ago. Engel sees promise in producing and conducting further research on both major and minor cannabinoids.

In the hemp and CBD space, Organigram has an investment in Eviana and a partnership with 1812 Hemp. The Eviana partnership is about sourcing CBD, particularly in European markets, according to Engel. He points to 1812 Hemp’s differentiated genetics, allowing for higher CBD levels after processing.

A Varied Approach to Funding

Since Engel has become CEO, Organigram has pursued funding in multiple different formats, including traditional equity financing, a convertible debenture, traditional debt, and an ATM offering. Much of the capital the company has raised to-date has been earmarked for facility expansion and investing in automation, according to Engel.

The $140 million credit facility, announced last year, includes $115 million in traditional debt and a $25 million revolving credit facility–the credit facility could increase to $175 million. The company decided to do the debt facility because of the reasonable rates, according to Engel. The company has drawn $85 million against that debt facility thus far.

In December, Organigram launched an ATM program, which gives it flexibility in terms of accessing capital, according to Engel.

Now that the company has gone through multiple different approaches to funding, the team understands the pros and cons of each. There isn’t a preference for one approach over another; instead, future funding considerations will depend on the timing and market dynamics, according to Engel.

Future Outlook

Organigram does not release guidance, in part because the company’s growth is still tied to the growth of the overall market, according to Engel. He is optimistic about that market growth as Ontario’s recreational program is set to accelerate licensing and more derivative products roll out. He recommends investors look at metrics like the cost of goods, gross margin, and adjusted EBITDA.

As the capital markets continue to be challenging, Organigram fields a significant number of pitches by companies looking to be acquired. The team will take a look at these opportunities, but it is only interested in companies that bring efficiency and innovation to the table, according to Engel.

While legitimate cannabis operators are still competing against the illicit market, Organigram continues to focus on automation and innovation. He believes continuous improvement will allow companies to bring superior products to market and help them succeed in the competitive industry.

New Cannabis Ventures provides an Investor Dashboard for Organigram, which is a client. Listen to the entire interview:

March 01, 2020
 

The Public Cannabis Company Revenue & Income Tracker, managed by New Cannabis Ventures, ranks the top revenue producing cannabis stocks that generate industry sales of more than US$7.5 million per quarter (C$9.9 million). This data-driven, fact-based tracker will continually update based on new financial filings so that readers can stay up to date. Companies must file with the SEC or SEDAR to be considered for inclusion. Please note that we raised the minimum quarterly revenue in May from US$2.5 million and from US$5.0 million in October.

45 companies currently qualify for inclusion, with 29 filing in U.S dollars and 16 in the Canadian currency, which is the same as when we reported at the end of January. Supreme Cannabis (TSX: FIRE) (OTC: SPRWF) fell off due its fiscal Q2 revenue declining to below the minimum, while High Tide (CSE: HITI) (OTC: HITIF) joined the group for the first time.

In May 2019, we began to include an additional metric, “Adjusted Operating Income”, as we detailed in our newsletter. The calculation takes the reported operating income and adjusts it for any changes in the fair value of biological assets required under IFRS accounting. We believe that this adjustment improves comparability for the companies across IFRS and GAAP accounting. We note that often operating income can include one-time items like stock compensation, inventory write-downs or public listing expenses, and we recommend that readers understand how these non-cash items can impact quarterly financials. Many companies are moving from IFRS to U.S. GAAP accounting, which will reduce our need to make adjustments.

One trend we have observed is that many of the companies are now providing pro forma revenue as well, which is an attempt to more accurately portray the operations by taking into account the results of closed and pending acquisitions as the multi-state operator (MSO) space rapidly consolidates. Our rankings include only actual reported revenue.

For companies that report in U.S. dollars, Acreage Holdings (CSE: ACRG) (OTC: ACRGF), AYR Strategies (CSE: AYR) (OTC: AYRSF), cbdMD (NYSE American: YCBD), Green Growth Brands (CSE: GGB) (OTC: GGBXF), GW Pharma (NASDAQ: GWPH), Innovative Industrial Properties (NYSE: IIPR) and MedMen Enterprises (CSE: MMEN) (OTC: MMNFF) provided updated financials during March. The theme appeared to be growing revenue but expanding operating losses, though there were exceptions. Acreage Holdings reported a sequential decline in revenue in Q4 and experienced a substantially higher operating loss that exceeded $67 million. The company attributed the decline to a “an opportunistic wholesale transaction in Massachusetts during third quarter, which did not repeat in the fourth quarter.” It also cited regulatory delays in opening new stores. AYR Strategies saw Q4 revenue grow 1% sequentially as its operating loss expanded, and it provided guidance for 2020 that it expects to achieve revenue in excess of $207 million with adjusted EBITDA greater than $93 million. cbdMD grew revenue by 6% sequentially in fiscal Q1 but also saw its operating loss expand. Green Growth Brands fiscal Q2 revenue grew 12% sequentially, but the operating loss didn’t improve despite a better gross margin. The company will be selling 80% of its CBD business, which accounted for half the revenue. GW Pharma remained at the top of the list as its Q4 revenue of $109 million was slightly higher than the $108 million noted in its pre-announcement. Despite the 21% advance in revenue from Q3, the operating loss expanded by 14%. Cannabis REIT Innovative Industrial Properties posted a very strong report for its Q4, with revenue expanding 53% sequentially as its operating income grew 56%. Finally, while MedMen’s fiscal Q2 revenue grew 11% from Q1, the operating loss expanded 46% despite a reduction in corporate SG&A due, in part, to an accounting adjustment to its cost of goods sold.

American Dollar Reporting – Public Cannabis Company Revenue Tracker

During March, we expect reports from a substantial number of companies, including Charlotte’s Web (TSX: CWEB) (OTC: CWBHF), Columbia Care (NEO: CCHW) (OTC: CCHWF), Curaleaf Holdings (CSE: CURA) (OTC: CURLF), CV Sciences (OTC: CVSI), Green Thumb Industries (CSE: GTII) (OTC: GTBIF), GrowGeneration (NASDAQ: GRWG), Marimed (OTC: MRMD), Tilray (NASDAQ: TLRY) and Village Farms (TSX: VFF) (NASDAQ: VFF). Several other companies that are listed on the CSE with fiscal years ending in December could report as well, though their filings aren’t due until late April. Tilray is scheduled to report Q4 after the close on March 2nd, with analysts, according to Sentieo, expecting revenue to rise 9% from Q3 to $55.7 million. In Q4, the company’s cannabis revenue from adult-use and medical markets totaled $35.5 million, with the balance from its Manitoba Harvest unit acquired a year ago. GrowGeneration hasn’t yet announced its Q4 earnings release date, but it is likely in the second week of March. The company pre-announced revenue of $26 million and has provided soft guidance for revenue to reach $130 million, and it subsequently announced an acquisition that with annual sales of $12 million. Charlotte’s Web will report on March 24th and is expected to have generated $27.6 million revenue in Q4, up 10% from Q3 and 29% from a year ago. Curaleaf will report its Q4 on the 24th as well. Analysts expect revenue to grow to $83.2 million, which could make it the top publicly traded MSO, depending on the results of its peers. At the consensus, Curaleaf growth would be 35% above Q3 results and 160% above year-ago levels. Analysts expect the company to company to approach break-even on operating profits and to report positive adjusted EBITDA. Finally, GTI has scheduled a conference call for March 26th. The company’s Q4 is expected to have generated $76 million of revenue, which would represent growth of 12% from Q3 and 278% from a year ago. Analysts expect the company to report a small operating profit.

Of the companies that report in Canadian dollars, LPs Aurora Cannabis (TSX: ACB) (NYSE: ACB), Canopy Growth (TSX: WEED) (NYSE: CGC) and Valens Company (TSXV: VLNS) (OTC: VLNCF) and retailer High Tide provided updates in February. Canopy Growth maintained the top spot after posting 62% sequential growth in revenue in its fiscal Q3, while Aurora Cannabis saw its fiscal Q2 revenue decline 26% due to product returns and pricing adjustments primarily. Both companies continued to post large losses, with Canopy Growth seeing some improvement while Aurora Cannabis experienced deterioration. Valens surpassed several peers to take the fifth spot, with its fiscal Q4 revenue increasing 86% sequentially and its operating profit jumping 91% from Q3. High Tide, which generated a little more than half of its revenue in fiscal Q4 from cannabis sales and the balance from accessories sold wholesale and retail, experienced 37% sequential growth as it generated an expanded operating loss.

Canadian Dollar Reporting – Public Cannabis Company Revenue Tracker

During March, we expect financial updates from LPs Medipharm Labs (TSX: LABS) (OTC: MEDIF), Sundial Growers (NASDAQ: SNDL), Cronos Group (TSX: CRON) (NASDAQ: CRON) and HEXO Corp (TSX: HEXO) (NYSE: HEXO) and retailers Alcanna (TSX: CLIQ) (OTC: LQSIF) and High Tide. MediPharm Labs, which could announce an uplisting to the NASDAQ, is expected to see Q4 revenue decline slightly, according to Sentieo’s analyst consensus, which is at C$42.3 million. The company began generating revenue in 2019. Sundial Growers is also expected to have experienced a slight decline in Q4 revenue from C$33.5 to C$33.2 million. The company generated $28 million from its cannabis operations in Q3, with the balance from ornamental flowers. Cronos Group had previously scheduled its call for late February but delayed for unstated reasons. As an accelerated filer, it is required to file by March 2nd but can take an extension of 15 days. The company is expected to have generated C$15.7 million during Q4, which would represent 24% sequential growth. HEXO Corp is expected to have generated C$16.9 million revenue in its fiscal Q2, which would represent sequential growth of 16% and annual growth of 25%.

Visit the Public Cannabis Company Revenue Tracker to track and explore the complete list of qualifying companies. We have recently created a way for our readers to access our library of Revenue Tracker articles. For our readers who are interested in staying on top of scheduled earnings calls in the sector, we have have created and continually update the Cannabis Investor Earnings Conference Call Calendar.

March 01, 2020
 

Canadian licensed producers experienced their eleventh consecutive monthly decline during February, with the Canadian Cannabis LP Index falling 20.8% to 302.23:

Over the past year, the index has declined 69.7%:

The index remains substantially below the all-time closing high of 1314.33 in September 2018, just ahead of Canadian legalization. It closed the month at a new 52-week low, a level not seen since October 2016, and is now down 23.3% from its close of 393.78 at the end of 2019:

The index, which included 36 publicly-traded licensed producers that traded in Canada at the end of January, with equal weighting, is rebalanced monthly. Each of the members is also included in a sub-index, with 9 in the Canadian Cannabis LP Tier 1 Index, 6 in the Canadian Cannabis LP Tier 2 Index and 21 in the Canadian Cannabis LP Tier 3 Index during the month. Please note that at the end of 2019 we began excluding companies with a price below C$0.20 unless they generate quarterly industry revenue in excess of C$1 million. There are currently 17 publicly traded LPs that fail to qualify.

Tier 1

Tier 1, which included the LPs that are generating cannabis-related sales of at least C$10 million per quarter (in 2018, we used C$4 million as the hurdle), declined less than the other tiers as they fell 18.6% to 476.49, which followed a 2019 decline of 38.5%, when it ended the year at 642.23. Tier 1 has declined 25.8% so far this year. This group included Aphria (TSX: APHA) (NYSE: APHA), Aurora Cannabis (TSX: ACB) (NYSE: ACB), Canopy Growth (TSX: WEED) (NYSE: CGC), Cronos Group (TSX: CRON) (NASDAQ: CRON), HEXO Corp (TSX: HEXO) (NYSE American: HEXO), MediPharm Labs (TSX: LABS) (OTC: MEDIF), Organigram (TSXV: OGI) (NASDAQ: OGI), Supreme Cannabis (TSX: FIRE) (OTC: SPRWF) and Valens Company (TSXV: VGW) (CSE: VGWCF). The performance was mixed within this group, with Supreme Cannabis and Aurora Cannabis declining more than 25%, while MediPharm Labs, HEXO, Valens and Organigram all fell less than 13%.

Tier 2

Tier 2, which included the LPs that generate cannabis-related quarterly sales between C$2.5 million and C$10 million, fell 22.7%, underperforming the broader market after having outperformed in the prior two months as it closed at 448.04. In 2019, it lost 44.3% in 2019 after closing at 569.54 and is down 21.3% in 2020. This group included Delta 9 (TSXV: DN) (OTC: VNRDF), Emerald Health (TSXV: EMH) (OTC: EMHTF) TerrAscend (CSE: TER) (OTC: TRSSF), VIVO Cannabis (TSX: VIVO) (OTC: VVCIF), WeedMD (TSXV: WMD) (OTC: WDDMF) and Zenabis Global (TSX: ZENA) (OTC: ZBISF). TerrAscend posted the best performance of Tier 2 companies, declining less than 5%. Emerald Health and WeedMD, both of which lost more than 40% of their value during the month, were the worst performers.

Tier 3

Tier 3, which included the 21 qualifying LPs that generate cannabis-related quarterly sales less than C$2.5 million, declined 21.2% as it closed at 74.56. It ended at 96.76 in 2019, declining 45.0%, and is down 22.9% in 2020. Four Tier 3 companies produced positive returns, including Indiva (TSXV: NDVA) (OTC: NDVAF), which was the best performing stock in the entire index with a 20% gain, while eight dropped by more than 30%.

The returns for the overall sector varied greatly, with 4 names posting positive returns, while 12 declined by more than 30%, with the entire group posting a median return of -21.0%:

For March, the overall index will have 35 constituents, as we have removed James Wagner Cultivation (TSXV: JWCA) (OTC: JWCAF) because it no longer qualifies for inclusion due to its price being below C$0.20 and its quarterly industry revenue not meeting the minimum requirement of C$1 million for stocks that don’t meet the price minimum. Additionally, Supreme Cannabis has moved from Tier 1 to Tier 2 following a decline in quarterly revenue below C$10 million. Note that the date for making changes to the index was 02/26.

In the next monthly review, we will summarize the performance for March and discuss any additions or deletions. Be sure to bookmark the pages to stay current on LP stock price movements within the day or from day-to-day.

March 01, 2020
 

You’re reading a copy of this week’s edition of the free New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015.

Sign up to receive a copy in your inbox each Sunday morning.

Friends,

We spent part of last week attending the Benzinga Cannabis Capital Conference in Miami. Despite industry challenges and coronavirus fears, the turnout was very strong, with certain panels creating standing-room only situations. We think this was the largest attended Benzinga cannabis-related event yet, and we expect it to only get better.


One of our favorite presentations on Monday was a keynote address from Trulieve CEO Kim Rivers, who spoke about overcoming market challenges. For those not familiar with Kim or Trulieve, she has built a unique cannabis operation in Florida that has achieved dominant market share and unparalleled profitability, with revenue of $70.7 million in Q3 and an operating margin of 33%. One of the keys to Trulieve’s success, according to Rivers, is focus, and, without naming names, she criticized her peers tor “trying to do too much and to be too much.” Trulieve zigged when many others were zagging towards empire-building, and now, with capital scarce, many operators will be forced to focus their operations much more narrowly. This has been, in our view too, the biggest mistake cannabis operators have made.

MedMen gave Rivers additional evidence to support her criticism, announcing when it reported its financials on Wednesday afternoon that it will be moving to focus exclusively on retail going forward. Given vertical integration requirements in some of the states in which it operates, we think this means that the company will ultimately retrench to California, Illinois and Nevada, selling off the balance of its operations.

Whether in Canada or the U.S., many companies have overextended themselves as they operated under the assumption that capital would always be available to fund their winner-take-all vision. Canadian LPs are now retrenching from overseas markets as well as in Canada, and we expect to see more MSOs narrow their operations. Several of the largest MSOs have been saying for several months now that they will look to build within existing markets rather than expanding into new states.

The lack of focus, though, runs deeper than spreading a company too thin by chasing too many opportunities. When we speak with management teams, we try to understand the company’s core competency, whether it is their ability to create better products through cultivation or processing, to establish strong brands or to deliver an exceptional customer experience through their retail stores.

Over time, we expect companies to hone in on the areas where they are strongest and to outsource, when possible, those areas in which they are not. While MedMen’s plan may be too late, the idea is a good one. When we look at Canada, we have already seen success in specialization. Last week, Valens reported over C$30 million in revenue for its Q4 ending in November. Peer MediPharm Labs, which also focuses on extraction, reported Q3 revenue in excess of $43 million. Both of these companies are profitable as well. As the American cannabis industry evolves, we expect to see more companies specialize in cultivation and/or extraction, while others will focus primarily on branded products or retail.


With a singular focus as its defining competitive advantage, MediPharm Labs believes that whether for medical or adult-use products, precisely dosed, consumer-safe purified cannabis concentrates will be a base ingredient in high demand for all advanced derivative products.

CEO Pat Mcutcheon reaffirmed the company’s focus in December as the Cannabis 2.0 market ramps up. MediPharm Labs is well positioned to support its customers in Canada, as well as new customers in emerging international markets.


Get up to speed by visiting the MediPharm Labs Investor Dashboard that we maintain on their behalf as a client of New Cannabis Ventures. Click the blue Follow Company button in order to stay up to date with their progress.


New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:


To get real-time updates download our free mobile app for Android or Apple devices, like our Facebook page, or follow Alan on Twitter. Share and discover industry news with like-minded people on the largest cannabis investor and entrepreneur group on LinkedIn.

Get ahead of the crowd! If you are a cannabis investor and find value in our Sunday newsletters, subscribe to 420 Investor, Alan’s comprehensive stock due diligence platform since 2013. Gain immediate access to real-time and in-depth information and market intelligence about the publicly traded cannabis sector, including daily videos, weekly chats, model portfolios, a community forum and much more.

Use the suite of professionally managed NCV Cannabis Stock Indices to monitor the performance of publicly-traded cannabis companies within the day or over longer time-frames. In addition to the comprehensive Global Cannabis Stock Index, we offer a family of indices to track Canadian licensed producers as well as the American Cannabis Operator Index.

View the Public Cannabis Company Revenue & Income Tracker, which ranks the top revenue producing cannabis stocks that generate industry sales of more than US$7.5M per quarter.

Stay on top of some of the most important communications from public companies by viewing upcoming cannabis investor earnings conference calls.

Discover upcoming new listings with the curated Cannabis Stock IPOs and New Issues Tracker.

Sincerely,

Alan & Joel

February 29, 2020
 
The United Nations narcotics enforcement agency president considers whether drug control treaties are outdated, experts share insights on how the coronavirus might affect the marijuana industry, MJ labs could see new opportunities in testing hemp - and more of the week’s top cannabis business news
February 28, 2020
 
Marijuana pioneer Andy Williams announced on Friday he is leaving Denver-based Medicine Man Technologies, the vertically-integrated MJ company he founded in 2014
February 28, 2020
 
A labor union filed a complaint with Massachusetts regulators, alleging multistate marijuana operator iAnthus Capital Holding violated state law by issuing written warnings to two pro-union workers at a MJ cultivation and processing facility in Holliston, Massachusetts
February 28, 2020
 
Multiple marijuana growers in Southern California have been sued by residents of a city in south Santa Barbara County that charge smells from greenhouses led to health issue
February 28, 2020
 
Florida would cap the amount of THC in medical marijuana at 10% for patients under 21 years old under a state Senate bill amendment filed Friday, a move that would be disruptive to the state's fast-growing MMJ industry
February 28, 2020
 

DENVER-Feb 28, 2020-(BUSINESS WIRE)–Medicine Man Technologies Inc. (OTCQX: MDCL) announced today that Andy Williams, president and vice chairman of the Board, has decided to leave the Company to focus on cannabis medical and genetic research, along with pursuing new opportunities in the cannabis industry.

Williams, a cannabis entrepreneur, founded the Company in 2014 and led its growth over the last five years. Most recently, he was a proponent of Colorado House Bill 19-1090, which opened the Colorado cannabis industry to outside funding beginning on November 1, 2019. This new era in Colorado has provided the Company with the opportunity to create one of the leading vertically integrated cannabis operators within the state through strategic acquisitions.

Medicine Man Technologies is uniquely positioned to become a recognized leader in the U.S. cannabis market. Possessing an abundance of world-class cannabis industry experience, coupled with business management expertise, makes this the most exciting cannabis business in the world. I am confident the Company will continue to deliver on its aggressive growth strategy and will become a global leader in the near future, Andy Williams said in a farewell discussion.

We credit where Medicine Man Technologies is today with Andys vision from years ago. As a pioneer in the Colorado cannabis space, he set the foundation and positioned Medicine Man Technologies to grow to new heights. We are grateful for Andys leadership and contributions, and wish him well as he moves on to his next chapter. Additionally, I would like to reiterate the path that the Company has carved out will enable us to become one of the leading vertically integrated cannabis operators.

Justin Dye, Executive Chairman and Chief Executive Officer of Medicine Man Technologies

With our goal to close the pending acquisitions in the first half of 2020, we are on schedule with our acquisitions and are making great progress. I am pleased we are executing our plan and I am very proud of our team. I remain excited for what the year has in store for the Company, our employees, our shareholders, our communities and above all, cannabis consumers.

For more information about Medicine Man Technologies, please visit https://www.MedicineManTechnologies.com/.

About Medicine Man Technologies

Denver, Colorado-based Medicine Man Technologies (OTCQX: MDCL) is a rapidly growing provider of cannabis consulting services, nutrients, and supplies. The Company’s client portfolio includes active and past clients throughout the cannabis industry in 20 states and seven countries. The Company has entered into agreements to become one of the largest vertically integrated seed-to-sale operators in the global cannabis industry. Current agreements will enable Medicine Man Technologies to offer cultivation, extraction, distribution and retail pharma-grade products. Management includes decades of cannabis experience, a unique combination of first movers in industrial cannabis and proven Fortune 500 corporate executives.

Original Press Release

February 27, 2020
 

NEW YORK and TORONTO, Feb. 27, 2020 /PRNewswire/ – iAnthus Capital Holdings, Inc. (“iAnthus” or the “Company”) (CSE: IAN,OTCQX: ITHUF), which owns, operates, and partners with best-in-class regulated cannabis operations across the United States, announced today that it has filed a Statement of Claim (the “Claim”) in the Ontario Superior Court of Justice against Oasis Investments II Master Fund Ltd. (“Oasis”). iAnthus filed the Claim in the interests of defending the Company against interference with the Company’s financing and business by an unsecured lender who is seeking to better its position at the expense of the Company’s shareholders and other stakeholders.

Oasis was issued an unsecured convertible debenture (the “Unsecured Debenture”) in the principal amount of US$25 million in connection with the Company’s offering of unsecured convertible note units announced March 18, 2019 and May 2, 2019 (the “Offering”). Since closing of the Offering, Oasis has consistently agitated iAnthus with unfounded allegations and self-interested proposals, all with the goal of renegotiating the terms of the Unsecured Debenture. Recently, Oasis has alleged that iAnthus breached certain debt covenants and that an event of default has occurred. iAnthus vehemently disagrees that there is currently, or has ever been, an event of default and is confident that iAnthus has complied with all covenants under the Unsecured Debenture. While iAnthus believes that Oasis’ allegations are entirely unfounded, Oasis’ behavior has interfered with iAnthus’ ongoing financing activities and the Company’s business.

Remedies sought by iAnthus include a declaration that iAnthus is not in breach of its obligations under the Unsecured Debenture (and related purchase agreement), damages, and a court ordered injunction restraining Oasis from making further false or misleading statements about iAnthus and otherwise interfering with iAnthus’ contractual relationships.

iAnthus emphasizes that the decision to commence legal action against Oasis was not taken lightly and follows significant deliberation regarding Oasis’ underlying intentions and continued actions and its negative impact on the Company and other stakeholders. While unfortunate, this course of action is required to protect the rights of the Company, its shareholders and other stakeholders. Oasis’ repeated and continued actions, even after iAnthus provided Oasis with details about the Company’s compliance with the debt covenants, have left the Company with no option but to defend itself, the interest of its shareholders and other stakeholders by pursuing all legal remedies available, including through the initiation of legal proceedings.

After good faith efforts led by iAnthus’ management, it is highly regrettable that we have been forced to take this action against Oasis. Unfortunately, Oasis, which has a long history of taking activist measures to better its position through the courts and other means, has decided it would try the same tactics with iAnthus.

Julius Kalcevich, CFO of iAnthus

We are disappointed with Oasis’ attempt to extract value at the expense of our shareholders and other stakeholders, and we will pursue any and all remedies available to us as a result of Oasis’ self-interested behavior. We are in active discussions with a variety of financing sources, including significant existing lenders and investors who continue to believe strongly in the prospects of both iAnthus and the broader industry.

Hadley Ford, CEO of iAnthus, further commented: “Despite the volatility of the equity markets and Oasis’ unfounded allegations, we continue to execute on our business plan, and look forward to expected near term catalysts, including but not limited to: the opening of our first adult use Massachusetts dispensary, additional dispensary openings in Florida, New Jersey and New York, and positive regulatory developments in New York, New Jersey and Arizona which are expected to expand iAnthus’ addressable market. ”

Our asset base has never been better positioned and our operational momentum remains strong despite these distractions.

Hadley Ford, CEO of iAnthus

About iAnthus

iAnthus owns and operates best-in-class licensed cannabis cultivation, processing and dispensary facilities throughout the United States, providing investors diversified exposure to the U.S. regulated cannabis industry. Founded by entrepreneurs with decades of experience in operations, investment banking, corporate finance, law and health care services, iAnthus provides a unique combination of capital and hands-on operating and management expertise. iAnthus currently has a presence in 11 states, and operates 30 dispensaries (AZ-4, MA-1, MD-3, FL-12, NY-2, CO-1, VT-1 and NM-6 where iAnthus has minority ownership). For more information, visit www.iAnthus.com.

Original press release

 

February 27, 2020
 

Cresco Labs Announces the Opening of its First Four Sunnyside* Dispensaries in New York and the Launch of its Medical Cannabis Delivery Program in the New Hartford Area

Stores in Brooklyn, Huntington Station, New Hartford and Bardonia are the first dispensaries to operate under the Companys national retail brand on the East Coast

CHICAGO, February 27, 2020–(BUSINESS WIRE)–Cresco Labs(CSE:CL)(OTCQX:CRLBF) (Cresco or the Company), one of the largest vertically integrated multistate cannabis operators in the United States, announced today the conversion of four dispensaries to Crescos nationwide retail brand, Sunnyside*, in the Williamsburg neighborhood in Brooklyn, Huntington Station, New Hartford and Bardonia, New York. Cresco also launched today a home delivery service for medical cannabis patients in the New Hartford area of New York. Patients can place orders for home delivery for a variety of products including vape pens and cartridges, topical creams, oral tinctures and capsules atSunnyside.shop. Cresco plans to roll out its medical cannabis home delivery program to the three other communities with Sunnyside* locations in the coming months.

These dispensaries in the state of New York are the first stores to be rebranded under Crescos national retail brand on the East Coast. Cresco holds one of the 10 vertically integrated cannabis business licenses granted in the state by the New York State Department of Health. Each license gives the operator the right to operate one cultivation facility and four dispensaries in New York.

As we continue to build our national retail brand and consolidate the five dispensary brands we operate around the country under the Sunnyside* name, we remain focused on ensuring that we deliver against the promise of what Sunnyside* stands forwellness, education and convenience, said Charlie Bachtell, Cresco Labs CEO and Co-founder.

New York has a growing medical cannabis patient program of more than 114,000 people who look to dispensaries and their cannabis product forms to treat a variety of qualifying conditions and critical illnesses. With Sunnyside*, we aim to provide a best-in-class shopping experience through ongoing education, product availability and technology.

Charlie Bachtell, Cresco Labs CEO and Co-founder

The ease of home delivery provides the convenience that many living in New York will appreciate with the benefit of the quality and consistency that regulated, third-party tested, cannabis products can provide. Home delivery plays a critical role in our ecommerce strategy, and we are excited to offer this service to reach medical cannabis patients in our communities with the right products they need.

Registered medical cannabis patients can place a home delivery order seven days a week at Sunnyside.shop with a minimum order of $80 required for delivery service. Free delivery is available for orders of $150 or more. Distributed from Crescos Sunnyside* dispensary in New Hartford, delivery services are available for patients in the following communities: New Hartford, Utica, Marcy, Whitesboro, Oriskany, Clinton, Sauquoit, Frankfurt and Rome.

About Cresco Labs

Cresco Labs is one of the largest vertically-integrated multi-state cannabis operators in the United States. Cresco is built to become the most important company in the cannabis industry by combining the most strategic geographic footprint with one of the leading distribution platforms in North America. Employing a consumer-packaged goods (CPG) approach to cannabis, Crescos house of brands is designed to meet the needs of all consumer segments and includes some of the most recognized and trusted national brands including Cresco, Remedi and Mindys, a line of edibles created by James Beard Award-winning chef Mindy Segal. Sunnyside*, Crescos national dispensary brand, is a wellness-focused retailer designed to build trust, education and convenience for both existing and new cannabis consumers. Recognizing that the cannabis industry is poised to become one of the leading job creators in the country, Cresco has launched the industrys first national comprehensive Social Equity and Educational Development (SEED) initiative designed to ensure that all members of society have the skills, knowledge and opportunity to work in and own businesses in the cannabis industry. Learn more about Cresco Labs atwww.crescolabs.com.

Original press release

February 27, 2020
 

 

Innovative Industrial Properties Reports Fourth Quarter and Full-Year 2019 Results

Acquisitions Drive 269% Q4 Revenue, 311% Q4 Net Income and 293% Q4 AFFO Growth Year-over-Year

Fourth Quarter 2019 and Year-to-Date Highlights

Financial Results and Financing Activity

  • IIP generated total revenues of approximately $17.7 million in the quarter, representing a 269% increase from the prior years quarter.
  • IIP recorded net income available to common stockholders of approximately $9.6 million for the quarter, or $0.78 per diluted share, and adjusted funds from operations (AFFO) of approximately $14.3 million, or $1.18 per diluted share. AFFO and AFFO per diluted share represented increases of 293% and 211% from the prior years quarter, respectively.
  • IIP paid a quarterly dividend of $1.00 per common share on January 15, 2020 to stockholders of record as of December 31, 2019, representing a 186% increase from the prior years quarter and a 28% increase from IIPs third quarter 2019 dividend of $0.78 per common share.
  • In September, IIP established an at-the-market equity offering program, issuing shares of common stock from September through today for net proceeds totaling approximately $184.8 million.
  • Subsequent to the end of the quarter, in January, IIP completed an underwritten public offering of 3,412,969 shares of common stock, including the exercise in full of the underwriters option to purchase an additional 445,170 shares, resulting in gross proceeds of approximately $250.0 million.

Investment Activity

  • From October 1, 2019 through today, IIP acquired 20 properties, totaling approximately 1.0 million rentable square feet (including expected rentable square feet upon completion of properties under development), located in Colorado, Florida, Illinois, Michigan, North Dakota, Ohio, Pennsylvania and Virginia, and executed five lease amendments to provide additional tenant improvements at properties located in Arizona, California, Massachusetts and Pennsylvania.
  • These 20 properties and five lease amendments represented an aggregate investment by IIP of approximately $308.4 million (consisting of purchase prices and development / tenant reimbursement commitments, but excluding transaction costs).
  • In these transactions, IIP established new tenant relationships with Cresco Labs Inc., GR Companies Inc. (Grassroots), Green Thumb Industries Inc. (GTI) and LivWell Holdings, Inc., while expanding existing tenant relationships with Green Leaf Medical, LLC, Green Peak Industries LLC, Maitri Genetics, LLC, PharmaCann LLC, The Pharm, LLC, Trulieve Cannabis Corp. and Vireo Health, Inc.
  • From January 1, 2019 through today, IIP has grown its property portfolio from eleven properties comprising approximately 1.0 million rentable square feet in nine states, to 51 properties comprising approximately 3.2 million rentable square feet in 15 states. Also since January 1, 2019, IIPs total investment in its property portfolio has increased by 307% from $167.4 million to $680.7 million (consisting of purchase prices and development / tenant reimbursement commitments, but excluding transaction costs and approximately $51.5 million in the aggregate, which represents funds that tenants at certain properties may not elect to have IIP disburse to them and pay IIP the corresponding base rent on).

Board of Directors

IIP expanded its board of directors to six members, and appointed Mary Allis Curran, a former senior banking executive, as the sixth member; with Ms. Curran also appointed to serve on the boards audit committee and nominating and corporate governance committee.

Portfolio Update and Acquisition Activity

Portfolio Update

IIP acquired the following properties and made the following additional funds available to tenants for improvements at IIPs properties during the period from October 1, 2019 through February 26, 2020 (dollars in thousands):

(1)Includes expected rentable square feet at completion of construction.

(2)Excludes transaction costs.

(3)The tenant is expected to complete tenant improvements at the property, for which IIP agreed to provide reimbursement of up to $23.0 million. As of February 26, 2020, IIP funded approximately $11.2 million of the reimbursement.

(4)The tenant is expected to complete tenant improvements at the property, for which IIP agreed to provide reimbursement of up to approximately $250,000. As of February 26, 2020, IIP funded approximately $244,000 of the reimbursement.

(5)The tenant is expected to complete tenant improvements at the property, for which IIP agreed to provide reimbursement of up to approximately $13.5 million. As of February 26, 2020, IIP funded approximately $9.4 million of the reimbursement.

(6)The portfolio consists of six retail properties, with one property closing on October 25, 2019, three properties closing on November 4, 2019, one property closing on November 8, 2019 and one property closing on November 25, 2019. The tenant is expected to complete tenant improvements at certain of the properties, for which IIP agreed to provide reimbursement of up to approximately $1.2 million. As of February 26, 2020, IIP had funded approximately $312,000 of the tenant improvement allowance.

(7)The tenant is expected to perform construction at the property, for which IIP agreed to provide reimbursement of up to $7.0 million. As of February 26, 2020, IIP funded approximately $2.0 million of the reimbursement.

(8)The tenant is expected to complete tenant improvements at the property, for which IIP agreed to provide reimbursement of up to approximately $17.7 million, of which $10.7 million and $7.0 million are subject to reduction at the tenants option before April 30, 2020 and July 30, 2020, respectively. As of February 26, 2020, IIP had funded approximately $1.9 million of the tenant improvement allowance.

(9)The tenant is expected to complete tenant improvements at the property, for which IIP agreed to provide reimbursement of up to $19.3 million. As of February 26, 2020, IIP had funded approximately $1.0 million of the tenant improvement allowance.

(10)The tenant is expected to complete tenant improvements at the property, for which IIP agreed to provide reimbursement of up to approximately $10.9 million. As of February 26, 2020, IIP had funded approximately $1.0 million of the tenant improvement allowance.

(11)The tenant is expected to complete tenant improvements at the property, for which IIP agreed to provide reimbursement of up to approximately $2.3 million. As of February 26, 2020, IIP had funded approximately $1.2 million of the tenant improvement allowance.

(12)The amount relates to a lease amendment which increased the tenant improvement allowance under a lease at one of IIPs Pennsylvania properties by $4.5 million to a total of approximately $8.3 million. As of February 26, 2020, IIP had funded $3.4 million of the tenant improvement allowance.

(13)The tenant is expected to complete tenant improvements at the property, for which IIP agreed to provide reimbursement of up to approximately $8.0 million. As of February 26, 2020, IIP had funded approximately $2.7 million of the tenant improvement allowance.

(14)The amount relates to a lease amendment which increased the tenant improvement allowance under a lease at one of IIPs Arizona properties by $2.0 million to a total of $5.0 million. As of February 26, 2020, IIP had funded approximately $4.5 million of the tenant improvement allowance.

(15)The tenant is expected to complete tenant improvements at the property, for which IIP agreed to provide reimbursement of up to approximately $1.9 million. As of February 26, 2020, IIP had not funded any of the tenant improvement allowance.

(16)The amount relates to a lease amendment which increased the tenant improvement allowance under a lease at one of IIPs California properties by approximately $1.3 million. As of February 26, 2020, IIP had funded approximately $1.0 million of the tenant improvement allowance.

(17)The tenant is expected to complete tenant improvements at the property, for which IIP agreed to provide reimbursement of up to $4.3 million. As of February 26, 2020, IIP had not funded any of the tenant improvement allowance.

(18)The portfolio consists of two retail properties, with one property closing on February 19, 2020 and one property closing on February 21, 2020. The tenant is expected to complete tenant improvements at one of the properties, for which IIP agreed to provide reimbursement of up to $850,000. As of February 26, 2020, IIP had not funded any of the tenant improvement allowance.

(19)The amount relates to a lease amendment which increased the tenant improvement allowance under a lease at one of IIPs Pennsylvania properties by $6.0 million to a total of $16.0 million, which additional allowance may be drawn by the tenant starting on March 1, 2020. As of February 26, 2020, IIP had funded $8.8 million of the tenant improvement allowance.

(20)The amount relates to a lease amendment and development agreement amendment which increased the construction funding at one of IIPs Massachusetts properties by $4.0 million for a total of $27.5 million. IIP also canceled a remaining commitment to provide construction funding of $4.0 million for the tenant at one of IIPs Pennsylvania properties. As of February 26, 2020, IIP had funded approximately $23.0 million of the construction funding at the Massachusetts property.

From January 1, 2019 through February 26, 2020, IIP acquired 40 properties, totaling approximately 2.2 million rentable square feet (including expected rentable square feet upon completion of properties under development), located in Arizona, California, Colorado, Florida, Illinois, Massachusetts, Michigan, Nevada, North Dakota, Ohio, Pennsylvania and Virginia, and executed ten lease amendments to provide additional tenant improvements at properties located in Arizona, California, Illinois, Massachusetts, Michigan, Minnesota and Pennsylvania.

As of February 26, 2020, IIP owned 51 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New York, Nevada, North Dakota, Ohio, Pennsylvania and Virginia, totaling approximately 3.2 million rentable square feet (including approximately 871,000 rentable square feet under development/redevelopment), which were 98.9% leased (based on square footage) with a weighted-average remaining lease term of approximately 15.6 years. As of February 26, 2020, IIP had invested approximately $563.2 million in the aggregate (excluding transaction costs) and had committed an additional approximately $117.5 million to reimburse certain tenants and sellers for completion of construction and tenant improvements at IIPs properties. IIPs average current yield on invested capital is approximately 13.3% for these 51 properties, calculated as (a) the sum of the current base rents, supplemental rent (with respect to the lease with a tenant at one of IIPs New York properties) and property management fees (after the expiration of applicable base rent abatement or deferral periods), divided by (b) IIPs aggregate investment in these properties (excluding transaction costs and including aggregate potential development/redevelopment funding and tenant reimbursements of approximately $117.5 million). These statistics do not include up to approximately $15.9 million that may be funded in the future pursuant to IIPs lease with a tenant at one of IIPs Illinois properties, or the approximately $35.7 million that may be funded in the future pursuant to IIPs lease with a tenant at one of IIPs Massachusetts properties, as the tenants at those properties may not elect to have IIP disburse those funds to them and pay IIP the corresponding base rent on those funds. These statistics also treat IIPs Los Angeles, California property as not leased, due to the tenants default in its obligation to pay rent at that location in January and February 2020.

Financing Activity

In September 2019, IIP entered into equity distribution agreements with three sales agents, pursuant to which IIP may offer and sell from time to time through an at-the-market offering program up to $250 million in shares of its common stock. From September through today, IIP sold shares of its common stock for net proceeds of approximately $184.8 million under this program.

Subsequent to the end of the quarter, in January 2020, IIP completed an underwritten public offering of 3,412,969 shares of common stock, including the exercise in full of the underwriters option to purchase an additional 445,170 shares, resulting in gross proceeds of approximately $250.0 million.

IIP expects to use the net proceeds from these offerings to invest in specialized industrial real estate assets that support the regulated medical-use cannabis cultivation and processing industry and for general corporate purposes.

Financial Results

IIP generated total revenues of approximately $17.7 million for the three months ended December 31, 2019, compared to approximately $4.8 million for the same period in 2018, an increase of 269%. IIP generated total revenues of approximately $44.7 million for the year ended December 31, 2019, compared to approximately $14.8 million for 2018, an increase of 202%. The increase in both periods was driven primarily by the acquisition and leasing of new properties, in addition to contractual rental escalations at certain properties.

For the three months ended December 31, 2019, IIP recorded net income available to common stockholders and net income available to common stockholders per diluted share of approximately $9.6 million and $0.78, respectively; funds from operations (FFO) and FFO per diluted share of approximately $13.1 million and $1.09, respectively; and AFFO and AFFO per diluted share of approximately $14.3 million and $1.18, respectively. Fourth quarter 2019 AFFO and AFFO per diluted share for the quarter increased by 293% and 211% from the prior year period, respectively.

For the year ended December 31, 2019, IIP recorded net income available to common stockholders and net income available to common stockholders per diluted share of $22.1 million and $2.03, respectively; FFO and FFO per diluted share of $30.7 million and $2.88, respectively; and AFFO and AFFO per diluted share of approximately $34.9 million and $3.27, respectively. 2019 AFFO and AFFO per diluted share increased by 259% and 144% from the prior year, respectively.

FFO and AFFO are supplemental non-GAAP financial measures used in the real estate industry to measure and compare the operating performance of real estate companies. A complete reconciliation containing adjustments from GAAP net income available to common stockholders to FFO and AFFO and definitions of terms are included at the end of this release.

Teleconference and Webcast

Innovative Industrial Properties, Inc. will conduct a conference call and webcast at 10:00 a.m. Pacific Time (1:00 p.m. Eastern Time) on Thursday, February 27, 2020 to discuss IIPs financial results and operations for the fourth quarter and year ended December 31, 2019. The call will be open to all interested investors through a live audio webcast at the Investor Relations section of IIPs website at www.innovativeindustrialproperties.com, or live by calling 1-877-328-5514 (domestic) or 1-412-902-6764 (international) and asking to be joined to the Innovative Industrial Properties, Inc. conference call. The complete webcast will be archived for 90 days on IIPs website. A telephone playback of the conference call will also be available from 12:00 p.m. Pacific Time on Thursday, February 27, 2020 until 12:00 p.m. Pacific Time on Thursday, March 5, 2020, by calling 1-877-344-7529 (domestic), 855-669-9658 (Canada) or 1-412-317-0088 (international) and using access code 10139231.

About Innovative Industrial Properties

Innovative Industrial Properties, Inc. is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities. Innovative Industrial Properties, Inc. has elected to be taxed as a real estate investment trust, commencing with the year ended December 31, 2017. Additional information is available at www.innovativeindustrialproperties.com.


FFO and FFO per share are operating performance measures adopted by the National Association of Real Estate Investment Trusts, Inc. (NAREIT). NAREIT defines FFO as the most commonly accepted and reported measure of a REITs operating performance equal to net income, computed in accordance with accounting principles generally accepted in the United States (GAAP), excluding gains (or losses) from sales of property, plus depreciation, amortization and impairment related to real estate properties, and after adjustments for unconsolidated partnerships and joint ventures.

Management believes that net income, as defined by GAAP, is the most appropriate earnings measurement. However, management believes FFO and FFO per share to be supplemental measures of a REITs performance because they provide an understanding of the operating performance of IIPs properties without giving effect to certain significant non-cash items, primarily depreciation expense. Historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time. However, real estate values instead have historically risen or fallen with market conditions. IIP believes that by excluding the effect of depreciation, FFO and FFO per share can facilitate comparisons of operating performance between periods. IIP reports FFO and FFO per share because these measures are observed by management to also be the predominant measures used by the REIT industry and by industry analysts to evaluate REITs and because FFO per share is consistently reported, discussed, and compared by research analysts in their notes and publications about REITs. For these reasons, management has deemed it appropriate to disclose and discuss FFO and FFO per share.

Management believes that AFFO and AFFO per share are also appropriate supplemental measures of a REITs operating performance. IIP calculates AFFO by adding to FFO certain non-cash and infrequent or unpredictable expenses which may impact comparability, consisting of non-cash stock-based compensation expense and non-cash interest expense.

IIPs computation of FFO and AFFO may differ from the methodology for calculating FFO and AFFO utilized by other equity REITs and, accordingly, may not be comparable to such REITs. Further, FFO and AFFO do not represent cash flow available for managements discretionary use. FFO and AFFO should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of IIPs financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of IIPs liquidity, nor is it indicative of funds available to fund IIPs cash needs, including IIPs ability to pay dividends or make distributions. FFO and AFFO should be considered only as supplements to net income computed in accordance with GAAP as measures of IIPs operations.


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FFO and FFO per share are operating performance measures adopted by the National Association of Real Estate Investment Trusts, Inc. (NAREIT). NAREIT defines FFO as the most commonly accepted and reported measure of a REITs operating performance equal to net income, computed in accordance with accounting principles generally accepted in the United States (GAAP), excluding gains (or losses) from sales of property, plus depreciation, amortization and impairment related to real estate properties, and after adjustments for unconsolidated partnerships and joint ventures.

Management believes that net income, as defined by GAAP, is the most appropriate earnings measurement. However, management believes FFO and FFO per share to be supplemental measures of a REITs performance because they provide an understanding of the operating performance of IIPs properties without giving effect to certain significant non-cash items, primarily depreciation expense. Historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time. However, real estate values instead have historically risen or fallen with market conditions. IIP believes that by excluding the effect of depreciation, FFO and FFO per share can facilitate comparisons of operating performance between periods. IIP reports FFO and FFO per share because these measures are observed by management to also be the predominant measures used by the REIT industry and by industry analysts to evaluate REITs and because FFO per share is consistently reported, discussed, and compared by research analysts in their notes and publications about REITs. For these reasons, management has deemed it appropriate to disclose and discuss FFO and FFO per share.

Management believes that AFFO and AFFO per share are also appropriate supplemental measures of a REITs operating performance. IIP calculates AFFO by adding to FFO certain non-cash and infrequent or unpredictable expenses which may impact comparability, consisting of non-cash stock-based compensation expense and non-cash interest expense.

IIPs computation of FFO and AFFO may differ from the methodology for calculating FFO and AFFO utilized by other equity REITs and, accordingly, may not be comparable to such REITs. Further, FFO and AFFO do not represent cash flow available for managements discretionary use. FFO and AFFO should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of IIPs financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of IIPs liquidity, nor is it indicative of funds available to fund IIPs cash needs, including IIPs ability to pay dividends or make distributions. FFO and AFFO should be considered only as supplements to net income computed in accordance with GAAP as measures of IIPs operations.

Original press release

February 26, 2020
 

Ayr Strategies Reports Record Fourth Quarter and Full Year 2019 Financial Results
  • Ayr Reports Annualized 2019 Results In-Line with Ambitious Growth Expectations; Reiterates Strong 2020 Outlook
  • Record Quarterly Revenue of $32.3 Million and Adjusted EBITDA of $9.2 Million
  • Generated $3.9 Million Cash Flow from Operations in Q4
  • Nevada Retail Stores Average MSO-Leading $17 Million in Annual Sales, Accounting for Over 10% of all Nevada Cannabis Dispensary Revenue in Q4 2019
  • Massachusetts & Nevada Cultivation Expansion Projects Complete and Fully Funded, with Sales from Initial Harvest Expected in Q2

TORONTO, Feb. 26, 2020 (GLOBE NEWSWIRE) — Ayr Strategies Inc. (CSE: AYR.A, OTCQX: AYRSF) (Ayr or the Company), a vertically-integrated cannabis multi-state operator (MSO) with a presence in the western and eastern U.S., is reporting financial results for the three months and full year ended December 31, 2019.

Unless otherwise noted, all results are presented in U.S. dollars.

Annualized Full Year 2019 Financial Summary (vs. 2018)

  • Total revenue increased 75% to $124.2 million compared to $70.9 million.
  • Adjusted Gross Profit (a non-IFRS measure defined below) increased 78% to $63.0 million compared to $35.5 million.
  • Adjusted EBITDA (a non-IFRS measure defined below) increased 47% to $34.5 million compared to $23.5 million; when excluding corporate and public company costs, Adjusted EBITDA increased 80%.
  • Loss from operations decreased 8% to $61.9 million compared to $66.8 million.

Management Commentary

In just seven months of combined operations, our business has thrived and we have delivered on the ambitious expectations that we laid out for our shareholders.

Ayr CEO Jon Sandelman

Our Nevada dispensaries have become the market and industry leader in terms of productivity, and our Massachusetts businesses continued to outperform despite multiple regulatory challenges.

BDS Analytics ranks our dispensaries as the highest revenue generating stores among MSOs. In Nevada, our retail performance is stronger than ever with average annual revenue per dispensary of $17 million, with our top store generating nearly $26 million annually. We also consistently improved profitability across our Nevada portfolio in 2019 as we vertically integrated the four businesses we acquired, and our in-house brands are now accounting for approximately 27% of dispensary sales compared to 22% in Q3 and less than 3% at the start of 2019.

In Massachusetts, we currently sell to more than two-thirds of all recreational dispensaries. In light of the Massachusetts vape ban in the fourth quarter, we pivoted our resources to make up the lost revenue and margin from vapes, and we were the first cannabis company back to market when the vape ban was lifted earlier than expected in December. Further, we rolled out several Nevada brands in Massachusetts during the quarter, and both customer feedback and initial sell-through have been very strong. All of this underscores the strength of our teams on the ground, which provide us operational leverage and flexibility that is essential in the cannabis industry.

For 2020, our ambitious organic growth plans are fully funded. We have completed construction on our cultivation expansions in both Nevada and Massachusetts, and these expansions have more than doubled our capacity, taking our canopy from 27,000 square feet to 63,000 square feet. We are underway with our first grow cycles in these new facilities and expect sales from our initial harvests to begin in Q2 2020.

Looking beyond these key growth drivers for 2020, we continue to target business combinations that can expand our initial portfolio and footprint; these combinations would add to our current 2020 financial outlook. The cannabis market environment continues to favor our strengths of financial discipline, cash flow generation and a fully funded growth strategy, and we have every expectation of capitalizing on attractive M&A opportunities in 2020.

2020 Outlook

Ayr expects 2020 revenue to range between $207 million and $227 million, reflecting approximately 67% to 83% organic growth from 2019. The Company also expects adjusted EBITDA to range between $93 million and $103 million, reflecting approximately 170% to 199% organic growth from 2019.

For more information about the Companys 2020 outlook, including detailed financial bridges outlining various growth initiatives, please view Ayrs corporate presentation posted in the Investors section of the Companys website at www.ayrstrategies.com.

1 Non-IFRS measure defined in Definition and Reconciliation of Non-IFRS Measures below.
2 Includes data for October and November 2019; Nevada sales for December 2019 are unavailable.
3 Due to the qualifying transaction completed on May 24, 2019, the 2019 annual results have been normalized by taking the 221-day period and annualizing it to produce a full year of results, whereas the 2018 results represent pro forma consolidated results as reported in the Companys Business Acquisition Report filed on August 7, 2019.

Conference Call

Ayr CEO Jonathan Sandelman, CFO Brad Asher and COO Jennifer Drake will host a conference call tomorrow, February 27, 2020 at 8:30 a.m. Eastern time, followed by a question and answer period.

Conference Call Date: Thursday, February 27, 2020
Time: 8:30 a.m. Eastern time
Toll-free dial-in number: (877) 282-0546
International dial-in number: (270) 215-9898
Conference ID: 2431737

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at (949) 574-3860.

The conference call will be broadcast live and available for replay here.

A telephonic replay of the conference call will also be available after 11:30 a.m. Eastern time on the same day through March 5, 2020.

Toll-free replay number: (855) 859-2056
International replay number: (404) 537-3406
Replay ID: 2431737

Financial Statements

Certain financial information reported in this news release is extracted from Ayrs financial statements as at and for the three and twelve month periods ended December 31, 2019. These results presented herein are preliminary and subject to change. Ayr will file its annual financial statements on SEDAR shortly. All such financial information contained in this news release is qualified in its entirety by reference to such financial statements.

Definition and Reconciliation of Non-IFRS Measures

The Company reports certain non-IFRS measures that are used to evaluate the performance of its businesses and the performance of their respective segments, as well as to manage their capital structures. As non-IFRS measures generally do not have a standardized meaning, they may not be comparable to similar measures presented by other issuers. Securities regulators require such measures to be clearly defined and reconciled with their most comparable IFRS measure.

The Company references non-IFRS measures and cannabis industry metrics in this document and elsewhere. Non-IFRS measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these are provided as additional information to complement those IFRS measures by providing further understanding of the results of the operations of the Company from managements perspective. Accordingly, these measures should not be considered in isolation, nor as a substitute for analysis of the Companys financial information reported under IFRS. Non-IFRS measures used to analyze the performance of the Companys businesses include Adjusted EBITDA and Adjusted Gross Profit.

The Company believes that these non-IFRS financial measures provide meaningful supplemental information regarding the Companys performances and may be useful to investors because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making. These financial measures are intended to provide investors with supplemental measures of the Companys operating performances and thus highlight trends in the Companys core businesses that may not otherwise be apparent when solely relying on the IFRS measures.

Adjusted EBITDA
Adjusted EBITDA represents income (loss) from operations, as reported, before interest and tax, adjusted to exclude extraordinary items, non-recurring items, other non-cash items, including stock-based compensation expense, depreciation and amortization, the adjustments for the accounting of the fair value of biological assets and the incremental costs to acquire cannabis inventory in a business combination, and further adjusted to remove acquisition related costs.

Adjusted Gross Profit
Adjusted Gross Profit represents the gross profit, as reported, adjusted to exclude the accounting for the fair value of biological assets and the incremental costs to acquire cannabis inventory in a business combination.

A reconciliation of how Ayr calculates Adjusted EBITDA and Adjusted Gross Profit and reconciles them to IFRS figures is provided below. As well, the Company reminds you that Adjusted EBITDA and Adjusted Gross Profit are non-IFRS measures. Additional reconciliations and other disclosures concerning non-IFRS measures will be provided in our MD&A for the 3 months and year ended December 31, 2019, when filed.

About Ayr Strategies Inc.

Ayr Strategies (Ayr) is an expanding vertically integrated, U.S. multi-state cannabis operator, focusing on high-growth markets. With anchor operations in Massachusetts and Nevada, the company cultivates and manufactures branded cannabis products for distribution through its network of retail outlets and through third-party stores. Ayr strives to enrich and enliven consumers experience every day helping them to live their best lives, elevated.

Ayrs leadership team brings proven expertise in growing successful businesses through disciplined operational and financial management, and is committed to driving positive impact for customers, employees and the communities they touch. For more information, please visit www.ayrstrategies.com.

Company Contact:

Jennifer Drake, COO
T: (212) 299-7606

Investor Relations Contact:

Sean Mansouri, CFA or Cody Slach
Gateway Investor Relations
T: (949) 574-3860
Email: ayr@gatewayir.com

Original press release

February 26, 2020
 

MedMen Reports Second Quarter Fiscal 2020 Financial Results Designated News Release
  • Second quarter revenue of $44.1 million (excluding Arizona), up 50% year over year and 11% sequentially
  • Opened five new retail locations during the quarter, including four in Florida and one in Illinois
  • Corporate SG&A decreased by 11% sequentially and 30% from the prior year period
  • Company appointed new board of director members, including Cameron Smith, former US Securities
  • Exchange Commission Officer and Mel Elias, former President and CEO of The Coffee Bean & Tea Leaf
  • Announces sale of non-core Illinois cultivation license for total gross proceeds of $17 million

LOS ANGELES, Feb 26, 2020–(BUSINESS WIRE)–MedMen Enterprises Inc. (MedMen or the Company) (CSE: MMEN) (OTCQX: MMNFF) today released its consolidated financial results second quarter 2020 ended December 28, 2019. All financial information in this press release is reported in U.S. dollars, unless otherwise indicated.

Management Commentary

We feel positive about the progress made while remaining aware there is still substantial work to be done. The business is focused on the execution of a strategy to streamline operations, strengthen its balance sheet and bring in additional capital. The sustained power of the brand and consistent consumer loyalty is a regular reminder of our strengths and the opportunities within reach, said Ben Rose, executive chairman of the Board and Chief Investment Officer of Wicklow Capital.

This is a pivotal time for the Company where we have the opportunity to re-assess the business and narrow the focus on what we do best retail, to continue to cut costs and to execute on four-wall economics with a path to profitability.

Ryan Lissack, Interim Chief Executive Officer

I look forward to transitioning the company into its next chapter, which will be defined by financial discipline and strategic growth to drive long-term value creation for the Company and its stakeholders.

Second Quarter Fiscal 2020 Review

Financials:

  • Revenue: Systemwide revenue across MedMen’s operations in California, Nevada, New York, Illinois and Florida increased to $44.1 million for the quarter, up 50% year-over-year and 11% sequentially. Revenue figures do not include the Companys operations in Arizona, which are in the process of being divested and are classified as discontinued operations in the Companys financials.
  • Retail Gross Margin: Gross margins across retail operations were 51% compared to 52% in the prior quarter. In California, retail gross margin was 52%, compared to 53% in the previous quarter.
  • Corporate SG&A: Corporate SG&A totaled $26.8 million, a 30% decrease from fiscal second quarter 2019, representing $46 million in annualized savings since the initial cost-cutting efforts began. The Company revised its corporate SG&A target to an annualized run-rate of $65 million to be achieved by MedMens fiscal third quarter 2020.
  • Adjusted EBITDA: The Company reported an Adjusted EBITDA loss of $35.1 million for the quarter. The Adjusted EBITDA for the quarter does not include additional headcount reduction and retail optimization efforts the Company executed on subsequent to the quarter end. The Companys cultivation and manufacturing facilities contributed to $11.4 million of the total EBITDA loss.
  • California Retail EBITDA: Across its California retail footprint, the Company recorded a four-wall EBITDA margin before local taxes and distribution expenses of 16%, compared to 17% in the previous quarter.

Retail Highlights:

  • California: California retail revenue totaled $32.4 million for the second quarter, representing an 8% sequential increase from the previous quarter, and 37% increase from the same period last year. On a same-store basis, California retail stores are up 16% from the same period last year. The Beverly Hills, Santa Ana, LAX, Abbot Kinney and Downtown Los Angeles locations were up 43%, 43%, 40%, 30% and 30%, respectively, compared to the same period last year.
  • Nevada: Nevada retail revenue totaled $5.9 million for the second quarter, representing a 10% sequential increase from the previous quarter, and a 75% increase from same period last year. MedMen Paradise, the Companys flagship store in Las Vegas, recorded a 10% sequential revenue increase. The store was not open for the full second quarter 2019 for a year-over-year comparison.
  • Florida: During the quarter, the Company opened four locations in Florida, which include retail stores in Jacksonville Beach, Orlando-International Drive, Tallahassee and Sarasota. The Company operates a total of eight stores across the state. The Company is currently undergoing a strategic review of its Florida footprint to determine timing of additional store openings.
  • Illinois: The Company began operating its second store in Illinois, located in Evanston, on December 3, 2019. Both the new Evanston store and existing Oak Park store are currently serving recreational customers. The Company expects to have a total of four stores in Illinois by end of calendar year 2020.
  • Massachusetts: The Companys Fenway location is pending final regulatory approval and construction is anticipated to begin in calendar year 2020. In Newton, Massachusetts MedMen has signed a lease on a retail location and now is awaiting regulatory approvals.
  • New York: The Company operates four medical dispensaries in the state, with a flagship location on Fifth Avenue near Bryant Park.
  • Arizona: The Company is currently in the process of divesting its Arizona footprint, which includes three retail locations and various cultivation and manufacturing operations.

Capital Markets and Financing Activities:

  • Credit Facility: On November 27, 2019, the Company closed on $10 million of additional funding under Tranche 3 of the existing facility with Gotham Green Partners and its affiliates. As part of the amendments which were executed along with the funding, additional changes were made to the facility to provide greater flexibility to the Company.
  • Equity Investment: On December 27, 2019, the Company announced that it signed definitive documentation for its offering of Class B subordinate voting shares for aggregate gross proceeds of $20 million at a price per share of $0.43. Closing of the equity placement occurred in January 2020.

Corporate Governance:

  • On December 10, 2019, Co-Founder Andrew Modlin granted Ben Rose, Executive Chairman of the Board, a limited proxy in respect of 815,295 Class A Super Voting shares, which represented 50% of the total Class A Super Voting Shares for a period of one year. Such proxy may not be used to eliminate or change the rights of such shares or otherwise alter or amend the organizational documents of the Company.
  • Effective February 1, 2020, Adam Bierman, Co-Founder and Chief Executive Officer stepped down as Chief Executive Officer and agreed to surrender his Class A Super Voting shares. The board of directors named the Companys Chief Technology Officer, Ryan Lissack, as Interim Chief Executive Officer. Following expiration of the limited proxy granted by Andrew Modlin to Ben Rose, MedMen will only have one class of outstanding shares, Class B subordinate voting shares, each of which entitle the holder to one vote.

Subsequent Events:

  • Definitive Agreement on Sale of Non-Core Asset: On February 25, 2020 the Company entered into definitive agreements to assign its rights to acquire a licensed cultivation and manufacturing facility in Hillcrest, Illinois (Hillcrest Facility) for total gross proceeds of $17 million (Hillcrest Transaction). The Company previously received the right to acquire the Hillcrest Facility as part of its merger termination agreement with PharmaCann, LLC (PharmaCann). As part of the Hillcrest Transaction, the Company received an initial payment of $10 million (the Initial Payment). The second payment of $7 million is due prior to the closing of the Hillcrest Transaction, expected in the coming weeks.
  • MedMen 2020 Annual General Meeting Results: The Annual General Meeting of MedMen shareholders was held on February 21, 2020 in Toronto, Canada under Executive Chairman, Ben Rose. Shareholders adopted all the resolutions submitted for approval. Shareholders re-elected Ben Rose, Adam Bierman and Jay Brown to the Board of Directors and added new members Mel Elias, Cameron Smith, and Chris Ganan. MNP LLP was re-appointed as the auditors of the Company.
  • Secured Term Loan Amendment: On January 14, 2020, the Company announced the execution and closing of definitive documentation for amendments to the terms and conditions of the $78 million senior secured term loan with funds managed by Stable Road and its affiliates.

New Independent Board Members:

  • Mel Elias: Mr. Mel Elias, an active investor, entrepreneur and developer in Los Angeles has past and present board experience in CPG and consumer retail businesses both in the US and internationally. He was President and CEO of The Coffee Bean & Tea Leaf for 6 years, until it was sold in 2013.
  • Cameron Smith: Mr. Cameron Smith currently operates a private angel investment and advisory fund that focuses on health food. Prior to his investment and advisory business, Mr. Smith was General Counsel of The Island ENC, Inc., President of Quantlab Financial and worked at the SEC.

ADDITIONAL INFORMATION

Additional information relating to the Companys fiscal second quarter 2020 results is available on SEDAR at www.sedar.com in the Companys Interim Financial Statements and Management Discussion & Analysis (MD&A) for the quarter.

MedMen refers to certain non-IFRS financial measures such as Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), adjusted EBITDA (defined as earnings before interest, taxes, depreciation, amortization, less certain non-cash equity compensation expense, including one-time transaction fees and all other non-cash items) and four-wall retail gross margins. These measures do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other issuers.

Please see the Supplemental Information (Unaudited) Regarding Non-IFRS Financial Measures at the end of this press release and the MD&A for more detailed information regarding non-IFRS financial measures.

CONFERENCE CALL AND WEBCAST:

MedMen Enterprises will host a conference call and audio webcast with Executive Chairman, Ben Rose, Interim Chief Executive Officer Ryan Lissack and Chief Financial Officer Zeeshan Hyder today at 5:00 pm Eastern to discuss the financial results in further detail.

Webcast Information:
A live audio webcast of the call will be available on the Events and Presentations section of MedMens website at: https://investors.medmen.com/events-and-presentations/default.aspx and will be archived for replay.

Calling Information:
Toll Free Dial-In Number: (844) 559-7829
International Dial-In Number: (647) 689-5387
Conference ID: 8898600

ABOUT MEDMEN:

MedMen is North Americas premium cannabis retailer with flagship locations in Los Angeles, Las Vegas, Chicago and New York. Through a robust selection of high-quality products, including MedMen-owned brands [statemade], LuxLyte and MedMen Red, and a team of cannabis-educated associates, MedMen has defined the next generation discovery platform for cannabis and all its benefits. MedMens industry-leading technology enables a fully compliant, owned-and-operated delivery service and MedMen Buds, a nationwide loyalty program. MedMen believes that a world where cannabis is legal and regulated is safer, healthier and happier. Learn more at www.medmen.com

Original press release

 

February 26, 2020
 

Effective March 1, Utah will officially launch its medical cannabis program when the states Department of Health begins accepting applications for medical cannabis patient cards. The following day, March 2, Dragonfly Wellness, the states first medical cannabis pharmacy, is slated to open, with others soon to follow, In this review, we take a look at the history of Utahs cannabis program, the existing marketplace and potential for future growth.

History

The Beehive State legalized medical cannabis on Dec. 3, 2018 with the passage of HB 3001, the Utah Medical Cannabis Act. It amended Ballot Proposition 2, which was approved by Utah voters during the November 2018 general election by a vote of 52.75% to 47.25%. On Sept. 16, 2019, during a special session of Utahs legislature, lawmakers passed SB 1002, which made further amendments to the law. Most notably, it did away with plans to purchase medical marijuana from licensed private cultivators and distribute it to qualified patients through local health departments. The state also had planned to license five private companies to distribute medical cannabis creating a hybrid program. However, on the advice of attorneys, Utah decided against getting into the business, fearing that county health workers could be prosecuted for marijuana distribution because there is no exemption under the federal Controlled Substances Act that would permit such sales.

Existing Marketplace

When Utah opened up the application process for pharmacies, it received 130 applications from 60 different companies. On Jan. 3, 2020, Utah awarded 14 licenses to medical cannabis pharmacies, two of which (Columbia Care and Curaleaf) are owned by public companies:

  • Beehives Own (two licenses)
  • Bloom Medicinals
  • Columbia Care (NEO: CCHW) (OTC: CCHWF)
  • Curaleaf (CSE: CURA) (OTC: CURLF)
  • Deseret Wellness (two licenses)
  • Dragonfly Wellness
  • Justice Grown Utah (two licenses)
  • Pure UT, a wholly owned subsidiary of Moxie.
  • True North of Utah (two licenses)
  • Wholesome Therapy
Bloom Medicinals was one of 14 companies selected to open a pharmacy in Utah.

Three of the selected pharmacies also were awarded marijuana cultivation licenses. They are: Dragonfly Wellness, True North of Utah and Wholesome Therapy.

Because Utah has lots of land, but a spread-out population, the licenses were divided among four geographic regions. The pharmacies will open in two phases, with eight pharmacies able to open in March. Another six will be allowed to open as early as July.

Although the law allows for up to ten cultivation licenses to be issued, citing concern of oversaturating the market, the Utah Department of Agriculture and Food and the Utah Division of Purchasing selected just eight companies to participate in Utahs Medical Cannabis Cultivation Program from a total of 81 applicants. They are:

  • Dragonfly Greenhouse
  • Harvest of Utah, which is part of Harvest Health (CSE: HARV, OTC: HRVSF)
  • Oakbridge Greenhouses
  • Standard Wellness Utah
  • True North of Utah
  • Tryke Companies Utah (Cresco Labs (CSE: CL) (OTC: CRLBF) is in the process of purchasing Tryke)
  • Wholesome Ag.
  • Zion Cultivars

Seven of the eight licensees have crops in the ground. Several of the growers have harvested their first crop, according to a spokesperson for the Utah Department of Agriculture and Food.

Utah has one processor in operation thus far Dragonfly Processing LLC. However, on Jan 14, Curaleaf Holdingsannounced that it has received preliminary approval for a processing license by the Utah Department of Agriculture and Food. And, on Jan. 30, Toronto-based TerrAscend (CSE: TER; OTC: TRSSF) announced it was awarded approval for a Medical Cannabis Processor License by the Utah Department of Agriculture and Food. Standard Wellness, which has a cultivation license, noted on its website that it had applied for a processing license and planned to submit a pharmacy application in Utah, but no announcement has been made that it was awarded either license.

Utah patients with qualifying conditions have been able to use medical cannabis with a doctors letter since December 2018. However, they have had to cross state lines to get it. The online application process for medical cannabis cards for Utah purchases doesnt begin until March 1, so there are no figures as yet as to how many people have applied or received cards.

However, Utah did put together two statistical approaches suggesting that either there will be about 11,102 medical cannabis cardholders in the first year, increasing to approximately 38,350 by year five of the program. Or, under a second scenario, the state projects there will be about 16,399 medical cannabis card holders in the first year and 56,598 by year five. Thats just a fraction of Utahs overall population, which stands at about 3.16 million.

The Utah Department of Health is the organization managing participating healthcare providers. There are 17 providers on the current list of participating Qualified Medical Providers who have consented to share their information online. The law permits physicians, osteopathic physicians, advanced practice registered nurses (APRNs) and physician assistants (PAs) to prescribe.

Utah has a fairly liberal list of qualifying medical conditions as seen in the chart below.

Utah qualifying medical conditions

However, providers are limited and may not recommend medical cannabis treatment to more than 175 of the qualified patients at one time, or to no more than 300 patients, if the provider is board certified in the area in which he or she is prescribing.

Allowable forms range from pills to unprocessed cannabis flower as seen in the chart below.

Utah allowable cannabis forms

Future Growth

So far, Utah lawmakers are holding firm on their promise to keep recreational marijuana from becoming legal. Meantime, the existing cannabis laws are a moving target with several more amendments being proposed during this current legislative session. SB 121 makes further tweaks to the Medical Cannabis Act including the removal of a blister park requirement for cannabis flower and the expungement of criminal charges for past users who qualified for medical cannabis before the law passed.

One downside right now is the limited number of qualified medical professionals willing to prescribe cannabis fearing legal ramifications. Another is the fact that growers only recently got crops in the ground, so there will be a limited supply when it goes on sale. For Utah, the thinking right now appears to be slow and steady wins the race.

February 25, 2020
 

Exclusive Interview with Green Leaf Medical CEO Phil Goldberg

East coast MSO Green Leaf Medical has taken a calculated approach to growth, first focusing on winning licenses organically in its markets. Now, it is planning to go deeper into those markets with acquisitions. CEO Phil Goldberg spoke with New Cannabis Ventures about his companys multi-state footprint, its pending applications and the revenue outlook for the next few years. The audio of the entire conversation is available at the end of this written summary.

Corporate Culture at Green Leaf Medical

Goldberg was running an ad agency, which he started from the ground up in the late 1990s, when Maryland began to allow cultivation, extraction, and retail licenses. He and his brother Kevin Goldberg, now Green Leaf’s General Counsel, applied for licenses in the state and started the company.

Green Leaf prides itself on its corporate culture, according to Goldberg. The company offers its employees a matching 401(k) and full healthcare coverage. Green Leaf also focuses on its employee training program, run by Kristin Cousin, which includes classroom and on-the-job education.

Green Leaf Medical Team Members

The companys leadership also stands out in terms of diversity. Goldberg highlighted a number of team members including Executive Vice President Joy Strand, HR Director Kelly Collins, and Compliance Director Meagan Zaffaroni. Strand, former executive director of the Maryland Medical Cannabis Commission, brings her experience in government relations to the team, a major strength as the company enters new markets with different regulatory structures. Collins previously ran a human resources program in the healthcare space, and Zaffaroni oversees compliance across the companys multiple markets.

Goldberg has seen other companies rush to make acquisitions in strong markets only to find themselves without strong operators. Green Leaf is focused on building its business with the help of the strongest talent possible.

Multi-State Operations

Green Leaf has operations in Maryland, Pennsylvania, Ohio, and Virginia. In Maryland, its vertically integrated footprint includes cultivation, extraction, and retail. A 20,000-square-foot expansion of its cultivation facility in the state will take production from 500 pounds per month to 1,000 pounds per month, according to Goldberg. The Maryland extraction lab makes a number of products, and the company is looking to add more dispensaries in the state.

In Pennsylvania, Green Leaf has a 275,000-square-foot facility. A total of 100,000 square feet houses its cultivation and extraction operations, and the company is in the process of completing the remaining 175,000 square feet. The facility will have a total production capacity of 5,500 pounds per month.

Green Leaf’s Pennsylvania Facility

In Ohio, the company has dispensary operations. Its retail locations are performing well, but the market is taking longer to develop, according to Goldberg.

The company is one of five vertically integrated license holders in Virginia. Operations are located in Richmond, and the company is in the process of adding five additional dispensaries to its license.

Green Leaf is largely focusing on limited license states. It has pending applications for vertically integrated licenses in New Jersey and West Virginia. Georgia and Colorado are also states of interest. In Georgia, the company has started the Georgia Cannabis Industry Association in an effort to support the best possible regulations in the state, according to Goldberg. In Colorado, the company is exploring a potential acquisition.

The gLeaf Brand

The companys products are sold under the gLeaf brand. Flower, including pre-rolls, accounts for approximately 60 percent of its sales. The remaining sales are of concentrates, including vape cartridges and solid concentrates. Green Leaf is also building out a kitchen in Maryland in anticipation of forthcoming edibles regulations in the state.

Green Leaf Products Are Sold Under the gLeaf Brand

A Balanced Approach to Growth

Historically, Green Leaf has been built by entering new markets and winning licenses. Now, when the company plans to go deeper into its markets, it will explore possible acquisitions. For example, it is looking to add dispensaries to its Pennsylvania operations through acquisition. With its 275,000-square-foot facility in the state, Goldberg is confident in the size of the companys operations, but he sees additional dispensaries as an insurance policy in the case that the state issues additional licenses.

Equity, Debt, and Sale-Leasebacks

At the beginning of 2019, Green Leaf raised $20 million to fund its northeastern expansion, and the company still has approximately $7 million of capital. It has no remaining capital expenditures. Goldberg sees the company as well-positioned for the future.

Green Leaf has raised $27 million from the sale of equity to date, and it is in the process of shutting down its Series G. Goldberg recognizes that the sale of equity is dilutive, and now, the company is focused more on sale-leasebacks and debt. The company has worked with Innovative Industrial Properties to execute sale-leasebacks, and it is exploring another possible sale-leaseback deal for its expansion in Pennsylvania. Additionally, Green Leaf has a potential debt option, which it could use to complete some dispensary acquisitions in Pennsylvania.

The company has been approached by other MSOs and SPACs interested in a merger, but it hasnt moved forward with any of those proposals. For now, the company is focused on building its business through organic means and smart acquisitions. It will be ready to enter the public markets when the timing is right, according to Goldberg.

Revenue in 2020 and Beyond

Green Leaf has been steadily building its revenue over time. In 2018, the company did about $10 million sales and grew i 2019 to approximately $22 million. With Pennsylvania fully operational, the company expects to do $90 million in sales in 2020. As Virginia comes online, revenue is expected to grow to $160 million in 2021 and to $250 million in 2022, according to Goldberg.

As the company continues to grow, Goldberg is conscious of taking a measured pace. A lot of distressed assets are going to be coming onto the market, and it is going to be tempting to snap them up, he said. But, Green Leaf will remain dedicated to building a strong team and making carefully calculated acquisitions.

To learn more, visit the Green Leaf Medical website. Listen to the entire interview:

February 25, 2020
 

GW Pharmaceuticals plc Reports Fourth Quarter and Year-End 2019 Financial Results and Operational Progress
  • Total revenue of $109.1 million for the fourth quarter and $311.3 million for the full year
  • Total Epidiolex net product sales of $104.5 million for the fourth quarter and $296.4 million for the first full year of sales
  • Conference call today at 4:30 p.m. EST

LONDON and CARLSBAD, Calif., Feb. 25, 2020 (GLOBE NEWSWIRE) — GW Pharmaceuticals plc (Nasdaq: GWPH), a world leader in the science, development, and commercialization of cannabinoid prescription medicines, today announces financial results for the fourth quarter and full-year ended December 31, 2019.

2019 was an exceptional and transformative year for GW, led by the successful launch of Epidiolex in the US and approval in Europe. The positive impact this medicine has had on thousands of patients and their families provides a compelling foundation for continued growth in 2020.

Justin Gover, GWs Chief Executive Officer

We also expect 2020 to be an important year for our growing and developing product pipeline beyond Epidiolex as we build on our world leadership in cannabinoid science. We are focused on advancing nabiximols in the US in several indications and clinical programs with other potential products whilst continuing to bring Epidiolex to more patients in the US and Europe.

OPERATIONAL HIGHLIGHTS

  • Significant progress with Epidiolex (cannabidiol)
    • Total net product sales of Epidiolex of $104.5 million for the fourth quarter and $296.4 million for the full year
    • U.S. commercial update
      • 2020 focus on broadening prescriber base, expanding payer coverage, entering long term care segment, and expected launch of TSC indication
    • European launch underway
      • German commercial launch in Q4 2019
      • Secured positive NICE recommendation in the UK with commercial launch in Q1 2020
      • Commercial launches in France, Spain and Italy expected later this year, following pricing and reimbursement
    • Clinical progress with further indications broadening addressable market
      • Tuberous Sclerosis Complex (TSC) sNDA filed with FDA earlier this month and MAA submission to EMA expected in Q1 2020
      • Phase 3 trial in Rett Syndrome recruiting
      • Several new formulations of CBD advancing into additional Phase 1 studies in 2020, including modified oral solution, and capsule
    • Improved intellectual property rights and exclusivity
      • In addition to orphan exclusivity, 9 granted patents listed in Orange Book and align directly with Epidiolex FDA label with expiry dates to 2035
      • Epidiolex composition patent application recently published
      • 2 new allowed patents broadly covering use in LGS and Dravet syndrome
      • Additional patent applications under review, including patents related to the use of Epidiolex in TSC and other indications
  • Pipeline progress
    • Nabiximols (Sativex outside of the US)
      • Multiple Sclerosis spasticity -3 positive Phase 3 trials completed in Europe
        • US pivotal clinical program expected to commence in Q2 2020 to augment existing data package
      • Spinal cord injury spasticity – clinical program expected to commence in H2 2020
      • PTSD clinical program expected to commence in H2 2020
    • Schizophrenia (GWP42003)
      • Positive Phase 2a trial published and Phase 2b trial expected to commence H1 2020
    • CBDV in autism
      • 30-patient open label study in autism underway. Initial data expected in 2020.
      • Investigator-led 100 patient placebo-controlled trial in autism underway
      • Open label study in Rett syndrome and seizures underway
    • Neonatal Hypoxic-Ischemic Encephalopathy (NHIE) intravenous CBD program
      • Phase 1b safety study in patients underway
      • Orphan Drug and Fast Track Designations granted from FDA and EMA

FINANCIAL HIGHLIGHTS

  • Total revenue for the quarter ended December 31, 2019 was $109.1 million compared to $6.7 million for the quarter ended December 31, 2018
  • Net loss for the quarter ended December 31, 2019 was $24.9 million compared to a net loss of $71.9 million for the quarter ended December 31, 2018
  • Cash and cash equivalents at December 31, 2019 were $536.9 million compared to $591.5 million as of December 31, 2018

Conference Call and Webcast Information

GW Pharmaceuticals will host a conference call and webcast today at 4:30 pm EST. To participate in the conference call, please dial 877-407-8133 (toll free from the U.S. and Canada) or 201-689-8040 (international). Investors may also access a live audio webcast of the call via the investor relations section of the Companys website at http://www.gwpharm.com. A replay of the call will also be available through the GW website shortly after the call and will remain available for 90 days. Replay Numbers: (toll free):1-877-481-4010 or 919-882-2331 (international). For both dial-in numbers please use conference Replay ID: 33178.

About GW Pharmaceuticals plc and Greenwich Biosciences, Inc.

Founded in 1998, GW is a biopharmaceutical company focused on discovering, developing and commercializing novel therapeutics from its proprietary cannabinoid product platform in a broad range of disease areas. The Companys lead product, EPIDIOLEX (cannabidiol) oral solution CV, is commercialized in the U.S. by its U.S. subsidiary Greenwich Biosciences for the treatment of seizures associated with Lennox-Gastaut syndrome or Dravet syndrome in patients two years of age or older. This product has received approval in the European Union under the tradename EPIDYOLEX. The Company has submitted a supplemental New Drug Application to the U.S. Food and Drug Administration (FDA) to expand the indication for Epidiolex to include seizures associated with Tuberous Sclerosis Complex, for which it has reported positive Phase 3 data, and is carrying out a Phase 3 trial in Rett syndrome. The Company has a deep pipeline of additional cannabinoid product candidates, in particular nabiximols, for which the Company is advancing multiple late-stage clinical programs in order to seek FDA approval in the treatment of spasticity associated with multiple sclerosis and spinal cord injury, as well as for the treatment of PTSD. The Company has additional cannabinoid product candidates in Phase 2 trials for autism and schizophrenia. For further information, please visit www.gwpharm.com.

Original press release

February 25, 2020
 

Eaze Announces $35 Million Investment to Launch Vertical Operations and Increase Cannabis Access for 600,000+ Customers

Reports 71 Percent Annual Increase in Overall Deliveries and 74 Percent Annual Increase in First-Time Deliveries

SAN FRANCISCO, Feb 25, 2020–(BUSINESS WIRE)–Eaze, Californias largest legal cannabis marketplace, announced today it has closed a $20 million investment and secured the ability to raise up to an additional $20 million to complete its Series D funding, inaugurating Eazes verticalization and brand strategy to expand access to safe, legal, and affordable cannabis products.

The $20 million from Series D investors — led by FoundersJT LLC — joins a $15 million bridge round led by Eaze key stakeholders, Rose Capital, DCM, and T.J. Jermoluk.

Verticalization is Eazes second act. Until now, weve invested in proving our market fit, building an enormous and loyal customer base, and becoming Californias biggest marketplace for legal cannabis delivery.

Eaze Chief Executive Officer Ro Choy

Now, were proving we can make this business work in a more sustainable and profitable way, while continuing to grow Eazes existing services.

In January, Eaze acquired DionyMed Brands rights to retail licensee Hometown Heart (HTH) depots in Oakland and San Francisco, and now has oversight of HTHs day-to-day operations. In the coming weeks, Eaze will launch its own line of consumer brands in partnership with local licensees while continuing to support a broad array of independent, world-class California brands and independent licensed retailers across the state.

Despite challenges to Californias legal cannabis industry, the company experienced significant growth in 2019, as reported in the latest Eaze Insights: State of Cannabis Report. Highlights for 2019 include:

  • 97% annual increase in new sign-ups
  • 74% annual increase in first-time deliveries
  • 71% annual increase in overall deliveries
  • 104% annual increase in customers age 50+

Eaze also announced the promotions of Megan Miller to Chief Operating Officer and John Curtis to Chief Financial Officer. Miller, who previously served as Eazes Vice President of Finance and Marketplace, brings a unique combination of deep financial planning skills and comprehensive understanding of Eazes business to her new role. Curtis, who has served as interim CFO since October 2019, has been instrumental in sizing Eazes business and charting the companys path forward to verticalization.

To-date, Eaze has supported over five million legal deliveries, has 600,000 registered customers, and features more than 100 licensed brands through its network of retail partners.

About Eaze

Eaze, Californias largest marketplace for legal cannabis, connects adult consumers with licensed retailers and products. Eaze is on a mission to enhance safe access to legal cannabis, educate people about cannabis as a tool for wellness and drive smart cannabis policies. www.eaze.com.

Original press release

February 24, 2020
 
New Mexico has stopped issuing medical cannabis enrollment cards to people who live outside the state but will soon allow nonresident patients enrolled in other state programs to buy MMJ
February 24, 2020
 

NEW YORKandTORONTO,Feb. 24, 2020/PRNewswire/ –iAnthus Capital Holdings, Inc.(“iAnthus” or the “Company”) (CSE: IAN,OTCQX:ITHUF), which owns, operates, and partners with best-in-class regulated cannabis operations acrossthe United States, is pleased to announce the opening of its first NortheastBe.retail store located on Staten Island. A soft opening is planned forMarch 11, 2019.

The 3,850 square foot store, located at 338 New Dorp Lane, will be the only Registered Organization serving the borough ofStaten Island’spopulation of close to 500,000. A grand opening celebration forBe.Staten Islandis scheduled forMarch 26, 2020.

We are thrilled to debut our newBe.retail brand for the patients ofStaten Island, who have long been underserved by the legal cannabis market.

Hadley Ford, CEO of iAnthus

Bringing safe, tested, quality cannabis and excellent customer service to the medical cannabis patients inNew Yorkis our top priority and we look forward to serving the great people ofStaten IslandwithBe. our new, exciting retail concept.

The Company currently operates two medical dispensaries in the state under the Citiva brand, one inBrooklynand one in Wappingers Falls. TheWappingers Fallslocation will be rebranded asBe.shortly after theStaten Islandopening. The flagshipBe.store, located inBrooklynacross from the Barclays Center, is expected to open next month. The Company’s fourthNew Yorkstore will be located inIthaca.

The Company will be rebranding its existing store base across its operating footprint throughout the remainder of the year.

About iAnthus

iAnthus owns and operates best-in-class licensed cannabis cultivation, processing and dispensary facilities throughoutthe United States, providing investors diversified exposure to the U.S. regulated cannabis industry. Founded by entrepreneurs with decades of experience in operations, investment banking, corporate finance, law and health care services, iAnthus provides a unique combination of capital and hands-on operating and management expertise. iAnthus currently has a presence in 11 states, including 30 dispensaries (FL-12, AZ-4, MD-3, MA-1,NY-2, CO-1, VT-1, and NM-6 where iAnthus has minority ownership). For more information, visitwww.iAnthus.com.

Original press release

February 23, 2020
 

You’re reading a copy of this week’s edition of the free New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015.

Sign up toreceive a copy in your inbox each Sunday morning.

Friends,

One of the most exciting developments in our seven years of focusing on the cannabis sector has been the emergence of robust publicly-traded companies. Evidence of this can be found easily by looking at the market caps and trading volumes as well as the trading exchanges of which many of the leading companies in theGlobal Cannabis Stock Index. 46% of the stocks in the index trade on a major U.S. exchange, and, in contrast to several years ago, only 2 (5%) trade exclusively on the OTC. Another sign of the legitimacy of the sector is that thePublic Cannabis Company Revenue & Income Trackerincludes 16 names with an annual revenue run-rate in excess of $100 million. Finally, only a fewinstitutional investment professionals had their eyes on the sector just a few years ago, but now there are a couple of dozen Wall Street and Bay Street firms covering it.

Despite this clear progress, the sector remains riddled with low quality penny stocks. Fortunately, many of them have faded off into the sunset. Still, new companies try to take short-cuts to get investor attention rather than building a following by executing on solid business fundamentals and we are noticing that investors are no longer falling for these tricks.

This week, a stock promoter aggressively pushed a Canadian ancillary products company, who hired the promoter since January.The $250,000 stock promotion that is supposed to lastsix-months fell flat on its face. This follows that same promoter’s last campaign, which saw the promoted stock plunge by more than 90% since pushing the unproven company on its followers. In the case of the new promotion, the company, which hasn’t yet generated any revenue, had completed a $3.9 million capital raise at C$0.35 in December (shares and $0.50 warrants will unlock on April 11th). It also has a substantial number of shares that were issued at much lower prices, including 4.4 million shares at C$0.05 on a post-consolidation basis. The stock had closed last Friday at C$0.75 and traded to an all-time high of C$0.90 on Tuesday after the blast email went out only to trade as low as C$0.53, leaving those who chased it with losses as great as 41% in less than 48 hours. Traders and investors aren’t falling for this kind of manipulation any longer, and that is a good thing. Another popular trick was in full force this week as well, with four poorly performing cannabis companies announcing name changes, including Canbiola (Can B), North Bud Farms (Bonfire Brands), Terra Tech (Onyx Group Holdings) and Westleaf (Decibel Cannabis Company). These companies follow a long list of losing penny stocks that have tried to change their poor reputationby changing their name, but it is a tactic that rarely works. As the saying goes, a leopard can’t change its spots.

We wish that the opportunists taking short-cuts would fade away more quickly, as their actions negatively impact the sector, but we are glad to see that investors are conducting due diligenceand are now not only avoiding these parlor tricks but actively calling them out as well. We are optimistic that despite the capital market challenges and industry headwinds that have persisted over the past few quarters, investors will ultimately be rewarded for paying attention to the fundamentals of the companies, and this is why we share fact-based resources like our family of indexes and our financial trackers with our readers, keeping them well informed as the legal cannabis market continues to develop.


Since 2015, Indiva has been driven toset the standard for quality and innovation, being a company always built for “cannabis 2.0”. The company’s recent capital raise has allowed theproceeds for capex (automation equipment, and final construction costs at their facility in London) and working capital (i.e. chocolate, distillate andpackaging).The company’s portfolio of products includes premium pre-rolls, the source of revenue-to-date, and now capsules and edibles. Its Bhang Chocolates are now available in Ontario and Alberta, and the company will introduce Ruby Cannabis Sugar, Sapphire Cannabis Salt, Gems, and more later this year.

Get up to speed by visiting theIndiva Investor Dashboardthat we maintain on their behalf as a client of New Cannabis Ventures. Click the blue Follow Company button in order to stay up to date with their progress.


New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:


To get real-time updates download our free mobile app forAndroidorAppledevices,like ourFacebookpage, or follow Alan onTwitter.Share and discover industry news with like-minded people on the largest cannabis investor and entrepreneur group onLinkedIn.

Get ahead of the crowd! If you are a cannabis investor and find value in our Sunday newsletters,subscribe to 420 Investor, Alan’s comprehensive stock due diligence platform since 2013. Gain immediate access to real-time and in-depth information and market intelligence about the publicly traded cannabis sector, including daily videos, weekly chats, model portfolios, a community forum and much more.

Use the suite of professionally managedNCV Cannabis Stock Indicesto monitor the performance of publicly-traded cannabis companies within the day or over longer time-frames. In addition to the comprehensive Global Cannabis Stock Index, we offer a family of indices to track Canadian licensed producers as well as the American Cannabis Operator Index.

View thePublic Cannabis Company Revenue & Income Tracker, which ranks the top revenue producing cannabis stocks that generate industry sales of more than US$7.5M per quarter.

Stay on top of some of the most important communications from public companies by viewing upcomingcannabis investor earnings conference calls.

Discover upcoming new listingswith the curatedCannabis Stock IPOs and New Issues Tracker.

Sincerely,

Alan & Joel

February 23, 2020
 
The vaping health crisis seems to have increased the public standing of legal marijuana companies as executives have taken the cue to review their processes
February 22, 2020
 
Rejected medical marijuana license applicants appeal Missouri regulators' decisions, Republican legislators ask key U.S. senator to oppose MJ banking measure, Colorado cruises past $1.75 billionin cannabis sales in 2019 -and more of the weeks top marijuana business news
February 21, 2020
 
The Kentucky House of Representative voted to legalize medical marijuana salesin the state
February 21, 2020
 
Toronto-based cannabis company Sol Global Investments on Friday said a company it owns secured a $15 million construction loan to fund construction of an 88,327-square-foot indoor medical marijuana cultivation, processing and lab facility
February 21, 2020
 
Leafly, an online cannabis strain and dispensary guide based in Seattle, closed its operation in Germany, Marijuana Business Dailyhas learned
February 21, 2020
 

Pelorus Has Currently Secured More $150m For New Closings

NEWPORT BEACH, CA (February 21, 2020)- Pelorus Equity Group, a cannabis-focused investment bank that specializes in providing value-add lending secured by real estate assets, today announced record growth for Pelorus Fund, its cannabis-focused commercial real estate fund that lends on commercial buildings and allows for cannabis-related tenants. The fund reported its most recent Q4 distribution of 20.4% and 15.5% internal rate of return (IRR) for 2019. Launched in 2018, the Pelorus Fund targets real estate-based financing opportunities with properly licensed and established cannabis businesses that have the required state and local operating licenses and permits. Pelorus has secured more $150M in the pipeline for new cannabis-related closings this year.

Coming off of a year of tremendous growth, Pelorus notably partnered with the Family Office Networks (FON) and their affiliated broker-dealer, Entoro Securities, to assist in the capital raise for the $100M Pelorus Fund. In addition to Pelorus Funds 2019 returns, Pelorus Equity Group has also originated more than $65M in commercial loans with cannabis tenants since 2016.

Pelorus Fund was able to gain significant returns and momentum despite last years turbulent market.

Dan Leimel CEO of Pelorus

We see a distinct demand for our cost-efficient real estate capital and are confident that our services can guide the industry through this period.

Pelorus has lent to provide the build-out for the tenants of some of the most visible CPG, medical and manufacturing companies in cannabis, including Canndescent, Growpacker, Harborside, Tikun Olam and a facility with one of the largest publicly traded pharmaceutical companies in the world.

ABOUT PELORUS EQUITY GROUP
Pelorus Equity Group offers a range of innovative transactional solutions addressing the diverse needs of real estate investors and portfolio managers. Our flexible acquisition and bridge lending programs are the direct result of our involvement in more than 5,000 transactions of varying size and complexity. Since 1991, our principals have participated in more than $1 billion of real estate investment transactions using both debt and equity solutions. We draw on our extensive experience to rapidly understand an opportunity, structure a logical solution and execute a timely close.

Source: Company

February 21, 2020
 

Exclusive Interview with Akerna Chairman and CEO Jessica Billingsley

New Cannabis Ventures last spoke with Akerna (NASDAQ: KERN) Chairman and CEO Jessica Billingsley just ahead of the company’s public debut in the summer of 2019. Since becoming the first cannabis technology company to trade on a major U.S. exchange, Akerna has added to its leadership team, fleshed out its platform with acquisitions and made new industry partnerships. Billingsley checked in with New Cannabis Ventures to discuss the companys deals and plans to continue using its ecosystem to drive compliance across the cannabis supply chain. The audio of the entire conversation is available at the end of this written summary.

Talent at Akerna

In addition to Billingsley, the Akerna leadership team includes COO Ray Thompson and CRO Nina Simosko. Thompson has experience in scaling SaaS businesses, while Simosko brings her executive experience with SAP, Nike, and Oracle to the table.

Akerna – Top 50 Cannabis Employers – MG Magazine

Akerna has also recently added John Fowle as CFO he has experience in acquisitions and integration. Following the companys acquisition of solo sciences, Alex Shah has come onboard as CTO. Shah holds a number of patents and has successfully navigated a number of tech edits during his career.

The Companys Evolving Platform

The Akerna platform began with the seed-to-sale technology Billingsley invented a decade ago at MJ Freeway. MJ Platform remains a core part of Akernas business, and it has grown approximately 30 percent year-over-year.

Additionally, new acquisitions are expanding the Akerna platform. A majority stake acquisition in solo sciences is putting the power of accountability and transparency into the hands of consumers, according to Billingsley. Cannabis design and technology company 14th Round has become a solo sciences customer, giving Akerna 40 percent of the California vaporizer market.

The solo sciences anti-counterfeiting technology also gives Akerna the opportunity to offer state regulatory tracking programs a less expensive alternative to RFID technology, according to Billingsley.

Akerna is also in the process of acquiring Canadian cannabis technology company Ample Organics for up to $45 million. The acquisition opens the door to cross-selling to both customer bases. Ample Organics does not have a point-of-sale offering in its product suite Akerna has MJ Platform. Akerna will also have the ability to leverage Ample Organics e-commerce platform, pharmacy integration, and insurance adjudication product, according to Billingsley.

Industry Partnerships

Akerna signed a deal with PAX Labs, which will provide business intelligence and market insight data. The company has also formed strategic partnerships with Netsuite and Sage. The integration with Netsuite will offer access to tax and financial planning, available first in Canada. Through the partnership with Sage, the Akerna platform will offer tax and financial planning globally, according to Billingsley.

The investment in ZolTrain will give Akerna clients access to a learning management system, which can help drive the education of budtenders and sales associates.

Acquisitions

Akerna had disclosed three previously signed LOIs. One has closed (solo sciences), while the second (Ample Organics) is expected to close in the next couple of months, according to Billingsley. The third is pending but on track to be completed.

Going forward, the company will continue to watch for acquisitions that will be accretive to shareholders. Those acquisitions could potentially be of competing companies or companies with compatible technology. Billingsley, a large shareholder herself, aims to keep shareholder interest in mind when evaluating opportunities.

Organic Growth

Organic growth is also a driving force for Akerna, with strong prospects across all of its product lines, according to Billingsley. The company is focused on leveraging its ecosystem and supporting cross-promotion across its platform. Consolidation in the industry is a significant growth opportunity for Akerna as well. Billingsley sees this activity driving technology adoption.

Funding Now and in the Future

At the end of 2019, Akerna has approximately $18.8 million in cash. Billingsley characterizes the company as adequately funded. Being listed on NASDAQ gives the company plenty of flexibility, and, going forward, it will continue to evaluate capital market strategies, she said.

Established Market Leaders Joining Forces

The Akerna team views the company as a software as a service (SaaS) company that happens to serve the fast-growing cannabis space. Its capital allocation looks like that of a traditional SaaS company. Akerna has investments in R&D, sales and marketing, and G&A that decreases over time, according to Billingsley.

Growth Factors

Much of the companys 28 percent growth has been driven by further adoption of the companys B2B MJ Platform. Billingsley also expects to see the growth of its government product offering, Leaf Data Systems.

The company has offered pro forma guidance of $27.5 million for the calendar year. That number takes into consideration both Akerna and Ample Organics, the acquisition of which is expected to close within a couple of months. The guidance offers investors a look at the result of this accretive transaction, according to Billingsley.

Akerna is focused on growth and innovation to meet the needs of the industry today and in the future. The companys intention is to deliver technology that provides more value than it costs.

To learn more, visit the Akerna website.

February 21, 2020
 
Challenges to Missouri's medical cannabis licensing process have inundated the state, despite efforts to avoid such a mess by hiring a third-party scorer
February 20, 2020
 

TORONTO, Feb. 20, 2020 (GLOBE NEWSWIRE) — MPX International Corporation (MPX International, MPXI or the Company) (CSE:MPXI; OTCQX:MPXOF) is pleased to announce that it has completed definitive agreements pursuant to the previously announced joint venture to establish low-cost cultivation using hi-tech greenhouses on the Sonop Farm, which is located in the traditional wine-growing region of Stellenbosch in South Africas Western Cape approximately 50 kilometres east of Cape Town. The biomass produced from the Companys operations in South Africa are expected to primarily support MPXIs operations in Malta. Upon receipt of a license to import, extract, produce finished products and distribute cannabis and cannabis derivatives, MPXI Malta Operations Ltd., a subsidiary of the Company, will produce EU-GMP quality cannabis oils and cannabis derivative products and pursue regulated medical cannabis distribution opportunities in Europe through Salus BioPharma Corporation, a wholly-owned subsidiary of the Company, as well as in Canada and Oceania.

Pursuant to the terms of the definitive agreements, MPXI has acquired an 80% interest in First Growth Holdings (Pty) Ltd. (First Growth) with the remaining 20% held by Simonsberg Cannabis Pty Ltd. (Simonsberg), whose shareholders include a prominent local winery continuing MPXIs string of successful local partnerships.

First Growth has applied under the Medicines and Related Substances Act, No. 101 of 1965 (South Africa) for a license to cultivate cannabis from the Sonop Farm (the License) from South African Health Products Regulatory Authority (SAHPRA). Construction commenced on the first cultivation phase of the project in September 2019 on an initial half hectare (approximately 54,000 square feet) with full development of the project resulting in up to six hectares (approximately 646,000 square feet) of advanced EU-Good Agricultural Practices (EU-GAP) certified greenhouse cultivation and EU-Good Manufacturing Practice (EU-GMP) certified extraction and processing laboratory.

The Company and Simonsberg loaned a principal amount of US$1.7 million on construction of the project with US$500,000 from Simonsberg at an interest rate of U.S. LIBOR plus 3% per annum. Upon receipt of the License, the US$500,000 loan from Simonsberg plus accrued and unpaid interest are convertible into common shares (the Shares) of MPXI at a deemed conversion price of C$0.35 per Share and based on the exchange rate posted by the Bank of Canada as of the date of the achievement of the License.

Upon First Growth achieving the applicable milestones outlined below, MPXI will issue warrants in MPXI (MPXI Warrants) to Simonsberg up to an exercise value of US$5,000,000. The MPXI Warrants will be issued in tranches, as outlined herein, will have a term of three years, and at an exercise price equal to the greater of (a) C$0.35 with respect to Warrant B and C and C$0.42 with respect to Warrant D, E and F and (b) the five day volume weighted average price (the VWAP) of MPXI on the Canadian Securities Exchange (the CSE) as of the day the respective milestone has been met, unless otherwise indicated below. The MPXI Warrants will be issued pursuant to all applicable securities laws, regulations, rules, rulings and orders and the rules of the CSE. The MPXI Warrants will be issued as follows:

  1. Warrant A: US$500,000 exercise value upon receipt by First Growth of the License from SAHPRA with an exercise price determined as the five-day VWAP of the MPXI Shares on the CSE as of the date of the definitive agreements;
  2. Warrant B: US$500,000 exercise value upon receipt by First Growth of the License from SAHPRA;
  3. Warrant C: US$1,000,000 exercise value upon successful cultivation and processing of 1,000 kg of Good Agricultural and Collection Practice (GACP) grade dried flower suitable for delivery to an extraction facility;
  4. Warrant D: US$1,500,000 exercise value upon successful cultivation and processing a further 5,000 kg (aggregate of 6,000 kg) of GACP grade dried flower suitable for delivery to an extraction facility;
  5. Warrant E: US$500,000 exercise value, upon the earlier of the (i) receipt by First Growth of an extraction and manufacturing license from SAHPRA and (ii) date that is twelve (12) months from the date that First Growth receives the License, if plans to build and fund an EU-GMP compliant extraction and manufacturing facility have not been approved; and
  6. Warrant F: US$1,000,000 exercise value, upon the earlier of (i) successful delivery of 100 kg of EU-GMP grade cannabis extract through First Growths processing facility and (ii) date that is twelve (12) months from the date that First Growth receives the License, if plans to build and fund an EU-GMP compliant extraction and manufacturing facility have not been approved.

In addition, First Growth will pay to Simonsberg a royalty of US$0.10 per gram of dried flower shipped.

As part of our strategy to create a cost-effective global supply chain, MPXI needed to create a source of high-quality, but low-cost cannabis biomass which could be easily exportable to Europe and other high- value cannabis markets, commented W. Scott Boyes Chairman, President and CEO of MPXI.We explored several potential cultivation jurisdictions taking into consideration relative production costs, sovereign risk, comparative ability to achieve GACP and EU-GMP certifications, readily-available infrastructure, governmental and legislative support for cannabis projects, the stability of the business environment and the availability and quality of local management/partnerships. South Africa, and the Western Cape, in particular, proved to be the best venue with high marks in each category.

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/d98c2f28-c962-41a4-ab82-53cca83f25f4

Our partnership with our local South African partners has already proven itself to be highly-effective. In a few short months, the South African team selected suitable land with easy access to electricity and water, immediately adjacent to a major highway, and only 45 minutes from Cape Towns airport and container pier.

W. Scott Boyes Chairman, President and CEO of MPXI

The site has been graded, fenced and the initial half hectare of high-tech greenhouse has been erected, equipped with security equipment and has received a preliminary inspection by SAHPRA. The next phase of the development will include internal fixturing and readiness for the commencement of cultivation expected mid-to-late 2020.

Simon Back, Director of Simonsberg, adds, MPXI brings a wealth of experience in the cannabis industry, and together with our team’s local knowledge and skills, we are confident that we will deliver on the vision of creating a world-class cultivation facility here in the Winelands.

About MPX International Corporation

MPX International Corporation is focused on developing and operating assets across the global cannabis industry with an emphasis on cultivating, manufacturing and marketing products which include cannabinoids as their primary active ingredient.

Original Press Release

February 20, 2020
 

Only Full-Spectrum Hemp-Derived CBD Pet Line to Comply withIndustry’s Two Highest Standards

BOULDER, CO,Feb. 20, 2020/PRNewswire/ – Charlotte’s Web Holdings, Inc. (“Charlotte’s Web” or the “Company”) (TSX:CWEB,OTCQX:CWBHF), the market leader inhemp-derived extract products, is pleased to announce that its edible pet supplementshave been approved to carry seals of approval from two of the most trusted organizations in their respective industries, the National Animal Supplement Council (NASC), a non-profit group dedicated to protecting and enhancing the health of companion animals throughout the country and the U.S. Hemp Authority, an organization created for the purpose of helping create standardization and quality across the hemp industry.

As the only full-spectrum hemp derived CBD brand to comply with both the NASC Quality Seal program and the U.S. Hemp Authority Certification Program, Charlotte’s Web is further validating to pet owners why it is known as The World’s Most Trusted Hemp Extract. The Company has been expanding its presence in the fast-growing pet CBD market, with its 12 SKU pet line experiencing 57% year-over-year revenue growth in Q3 2019.

Charlotte’s Web pet products will also now feature labels confirmingNon-GMO, Grain Free andUSAGrown Hemp as part of the Company’s commitment to corporate responsibility, health and wellness, and sustainable farming practices. As part of these efforts, Charlotte’s Web has been transitioning its hemp farming from conventional to organic agriculture practices, with more than 50% of its fields now certified organic. The Company is pursuing broad organic certification for its various product lines.

For canine owners, we understand that dogs aren’t just pets, they’re family. They deserve products you can trust. Charlotte’s Web is committed to producing the safest and highest quality pet products. We are very proud that our edible pet products have earned a seal of approval from both the NASC and the U.S. Hemp Authority.

Deanie Elsner, CEO of Charlotte’s Web

In addition to the Company’s full-spectrum hemp extract with naturally occurring CBD and other cannabinoids and terpenes, Charlotte’s Web canine chews include functional ingredients to support Hip & Joint, Senior Dogs and Calming. Each of these products will display the NASC Quality Seal on their packaging.

The NASC Quality Seal enables consumers to make safe and empowered purchasing decisions when shopping for their pets. The seal is awarded only to manufacturers and suppliers that have successfully passed an NASC facility audit and comply with rigorous quality standards, including strict labeling requirements, real-time adverse event reporting, and random product testing by an independent lab.

Charlotte’s Web products also carry U.S. Hemp Authority Certification, which requires meeting or exceeding stringent self-regulatory standards for Current Good Manufacturing Practices (cGMP) and passing an annual third-party audit. The Program is designed to increase consumer and law enforcement confidence in hemp products being sold in the market today by designating them as safe and legal.

Subscribeto Charlotte’s Web news

About Charlotte’s Web Holdings, Inc.

Charlotte’s Web Holdings, Inc. is the market leader in the production and distribution of innovative hemp-derived cannabidiol (“CBD”) wellness products. Founded by the Stanley Brothers, the Company’s premium quality products start with proprietary hemp genetics that are responsibly manufactured into hemp-derived CBD extracts naturally containing a full spectrum of phytocannabinoids, including CBD, terpenes, flavonoids and other beneficial hemp compounds. Charlotte’s Web product categories include CBD oil tinctures (liquid products), CBD capsules, CBD topicals, as well as CBD pet products. Charlotte’s Web hemp-derived CBD extracts are sold through select distributors, brick and mortar retailers, and online through the Company’s website atwww.CharlottesWeb.com. The rate the Company pays for agricultural products reflects a fair and sustainable rate driving higher quality yield, encouraging good farming practices, and supporting U.S. farming communities.

Charlotte’s Web is a socially conscious company and is committed to using business as a force for good and a catalyst for innovation. The Company weighs sound business decisions with consideration for how its efforts affect its employees, customers, the environment, and the communities where its employees live and where it does business, while maximizing profits and strengthening its brands. The Company’s management believes that socially oriented actions have a positive impact on the Company, its employees and its shareholders. Charlotte’s Web donates a portion of its pre-tax earnings to charitable organizations.

Shares of Charlotte’s Web trade on the Toronto Stock Exchange (TSX) under the symbol “CWEB” and are quoted in U.S. Dollars inthe United Stateson the OTCQX under the symbol “CWBHF”. As ofJanuary 1, 2020, Charlotte’s Web had 67,418,174 Common Shares outstanding and 95,342.49 Proportional Voting Shares convertible at 400:1 into Common Shares, for an effective equivalent of 105,555,170 Common Shares outstanding.

Original press release

February 20, 2020
 

 

Organigram Continues Cannabis 2.0 Roll Out, Releases Edison Vape Pens Powered by Feather, and Edison Bytes to Markets Across Canada

Product portfolio demonstrates Companys investment in innovative technology, world-class product development and production

MONCTON, New Brunswick-February 20, 2020-(BUSINESS WIRE)–Organigram Holdings Inc. (NASDAQ: OGI) (TSX: OGI), the parent company of Organigram Inc. (the Company or Organigram), a leading licensed producer of cannabis, is pleased to continue the roll out of its innovative portfolio of recreational adult use cannabis products including vape pens and cannabis-infused chocolate.

Edison Vape Pens Powered by Feather

Organigram has sent its first shipments of its Edison vape pens powered by Feather technology to jurisdictions across Canada from the Companys Moncton production campus.

Organigram, for its Edison Cannabis Co. brand, has an exclusive agreement in Canada with Feather Company Ltd. (Feather), a cannabis innovator committed to the production of premium-quality products that enhance the cannabis experience for consumers. Edison vape pens rely on Feathers innovative technology and pen construction.

The well-crafted, inhalation-activated pens are designed to offer adult consumers a simple, intuitive user experience. The ready-to-use vape pens combine sophisticated design, cannabis distillate and curated terpene blends, representative of Edisons star strains iconic aroma profiles.

These include:

  • Rio Bravo With terpinolene, caryophyllene, myrcene and pinene terpenes, this formulation captures the flavour of Edisons Rio Bravo flower.
  • Lola Montes This precise blend of dominant terpenes including limonene, caryophyllene, myrcene and linalool celebrates the flavour profile of Edisons Lola Montes flower.
  • La Strada Edisons La Strada strain is brought to life through this formulation with terpenes including myrcene, alpha and beta pinene, caryophyllene, and humulene.

Were pleased to release this advanced device, which will offer consumers a new consumption option.

Greg Engel, CEO, Organigram

The sleek, subtle, compact design and intuitive function of the Edison powered by Feather device creates a distinct offering, especially when combined with our signature Edison formulations; a breadth of variety will help strengthen the appeal of the regulated market and were proud to contribute this line of products to the Canadian retail market.

The Edison vape pen is constructed with a ceramic atomizer, internal stainless-steel components and borosilicate glass. No vitamin E acetate, propelyne glycol, vegetable glycerin or medium-chain triglyceride (MCT) are used in the formulation of the products; cannabinoids are extracted using C0.

The Edison pens are ready-to-use upon inhalation, with no time required to heat internal components, and do not require any chargers, additional cartridges, or separate batteries. Pens are available in 0.3-gram units, with a target potency of 80% THC (800 mg/g), though potency may slightly exceed or be less than target.

As Canadians, seeing Feather launch in our backyard after the demonstrable success weve had in Colorado, is a proud moment for our entire team, says Patrick Lehoux, CEO, Feather Company Ltd. Our goal has always been simple, to design intuitive products that seamlessly fit into our customers lives and elevate their everyday moments.

The Companys next-generation product portfolio includes high-quality infused chocolate and a dissolvable powdered beverage product, created using nanotechnology and providing a discreet and customizable experience for the consumer. First shipments of chocolate and dissolvable powder products are expected in calendar Q1 and Q2 of 2020, respectively. The Feather launch follows the release of the Companys first 2.0 offering, the Trailblazer Torch, which launched in Canada on December 17, 2019.

Edison Bytes

Following a $15 million investment in a high-speed, high-capacity, fully automated production line, the first run of Organigrams cannabis-infused chocolate offering has also shipped to retailers across Canada.

Edison Bytes, the Companys premium cannabis-infused chocolate truffles available in both milk and dark chocolate formulations, are the first of Organigrams chocolate products to be available to Canadian adult consumers. Products will be available as single chocolates containing 10 mg of cannabis each and sets of two truffles containing 5 mg each.

The chocolate making process is the product of collaboration between Organigrams engineering and quality assurance teams. Organigrams teams have dedicated efforts to producing a homogeneous product, reliably and consistently distributing defined doses of cannabis throughout the ganache.

Our team and partners have been identified for their own global expertise and unwavering commitment to quality, says Engel. Everyone involved in the conception, development and delivery of this line values creativity, curiosity and leadership. We are all committed to applying our experience and expertise to the development of a portfolio of novel products that delight our customers.

About Feather Company Ltd.

Feather Company Ltd. is a lifestyle design brand. We believe that good design combined with quality cannabis makes for great intuitive experiences. Our mission is simple, we make great products that elevate the everyday, one person and one moment at a time. Feather is a Canadian-based, global company, headquartered in Sudbury, with offices in Toronto, Ottawa and Denver, Colorado. You can find Feather products in dispensaries throughout Canada, Colorado and soon in California and the United Kingdom.

About Organigram Holdings Inc.

Organigram Holdings Inc. is a NASDAQ Global Select and TSX listed company whose wholly owned subsidiary, Organigram Inc., is a licensed producer of cannabis and cannabis-derived products in Canada.

Organigram is focused on producing high-quality, indoor-grown cannabis for patients and adult recreational consumers in Canada, as well as developing international business partnerships to extend the Company’s global footprint. Organigram has also developed a portfolio of legal adult use recreational cannabis brands including The Edison Cannabis Company, Ankr Organics and Trailblazer. Organigram’s facility is located in Moncton, New Brunswick and the Company is regulated by the Cannabis Act and the Cannabis Regulations (Canada).

Original Press Release

February 19, 2020
 

Exclusive Interview with Jushi Holdings Founder, Chairman, and CEO Jim Cacioppo

Multi-state operator Jushi(CSE: JUSH) (OTC: JUSHF) has $65 million in cash on its balance sheet, as of Dec. 31, 2019. Founder, Chairman, and CEO Jim Cacioppo spoke with New Cannabis Ventures about his companys management team, plans to go deep in its existing states and its approach to funding. The audio of the entire conversation is available at the end of this written summary.

Focusing on Strong Management

Cacioppo started analyzing and investing in the cannabis industry about five years ago. He didnt find many companies with management teams he wanted to invest in, so he decided to create an MSO: Jushi.

As the company was built, Cacioppo took a management first approach. He brings his experience from the hedge fund world, and a number of other team members who he previously worked with him in the financial space are a part of the Jushi team.

Additionally, Jushi acquired The Clinic, an operator out of Colorado. The acquisition was not about hard assets, but rather intellectual property and a strong management team, according to Cacioppo. EVP of Operations Ryan Cook runs the Denver office, which the company views as its HQ2. This office houses Jushis cannabis expertise, with team members like Vice President of Manufacturing Kim Eastman.

The companys HQ1 is in Florida, where Cacioppo is based. Here, Co-President and Founder Jon Barack (who worked with Cacioppo at One East Partners) also brings his financial acumen to the table.

Max Cohen, the founder of The Clinic, stepped away from his role as COO, remaining as an independent director. This move was always planned, according to Cacioppo.

Other important members of the Jushi leadership team include CFO Kim Bambach, VP of Human Resources Nichole Upshaw, and EVPs and CO-Heads of Legal Affairs Matt Leeth and Tobi Lebowitz.

Jushi Team Members

The company currently has 240 team members, but its focus on adding retail locations will increase that number significantly. Each new store opening adds about 20 people to the team, and Cacioppo expects Jushi to have 350 to 450 employees by the end of the year.

Jushis Multi-State Presence

Jushi has 25 retail locations, two cultivation locations, and three extraction and processing locations across multiple states, including:

  • Pennsylvania:The company has 15 retail locations in Pennsylvania, six of which are open.
  • Illinois:In Illinois, Jushi has four retail locations, two of which are open.
  • Virginia:Jushi is one of five vertically integrated license holders in Virginia. Cacioppo expects the company could gain 25 to 30 percent market share in the state.
  • California: The company has four retail locations under contract and expects to add more in California.
  • Nevada:Jushis footprint includes cultivation, extraction, and processing in Nevada.
  • Ohio:The company has extraction and processing, expected to open this summer, in Ohio.
  • New York:Jushi has a hemp license in New York, but it does not plan to open that facility this year due to volatility in the hemp market, according to Cacioppo.

Vetting Growth Opportunities

Jushi focuses on defendable markets with the opportunity to build a significant market share. For example, the company operates 15 of the 150 dispensaries allowed under the Pennsylvania program, equating to 10 percent market share, according to Cacioppo. Markets that allow companies to operate only a small number of dispensaries, such as Massachusetts, are not of interest to the company. The company also likes limited license markets, like California. Jushi has one of 17 operational licenses in San Diego.

When it comes to acquisitions, the company has a rigorous process for vetting opportunities. Its originations team, a part of its business development group, is responsible for getting to know the markets and the people operating in them. They then bring potential deals to the company for due diligence. Jushis in-house legal team, supplemented with external counsel, negotiates contract terms. The company does the work upfront to understand any potential liabilities and to avoid any potentially bad investments.

Jushi is focused on growth in its current markets, with California, Illinois, and Pennsylvania as its top priorities. Retail is the companys main focus in California, while cultivation and processing are top-of-mind in Illinois and Pennsylvania.

Cacioppo has a background in distressed assets, and the current market presents opportunities to take advantage of that experience. With a strong balance sheet, Jushi is keeping an eye open for other potential assets to pick up.

Jushis Brands

The companys owned brands include The Lab, Beyond/Hello, and Nira. The Lab, which came out of The Clinic, is a concentrates brand that Jushi plans to roll out across the country.

Beyond/Hello is the companys acquired retail brand. It is currently focused on Pennsylvania, but the company plans to expand its presence.

Inside the Scranton, PA Beyond/Hello Store

Nira, developed by Dr. Laszlo Mechtler, is a CBD brand. Jushi plans to roll out a THC formulation of the product, Nira Plus, in Virginia.

In addition to its owned brands, Jushi is planning to carry third-party brands, such as those developed in California, on its platform.

Approach to Funding and Capital Allocation

In January, Jushi closed $47 million in debt financing. Cacioppo pointed out that Jushi is the only small-cap MSO in the industry to have completed a debt deal. It has raised $185 million to-date, $40 million of which comes from founders and employees.

Jushi is looking at other ways of raising capital, including a sale-leaseback transaction on one if its California retail locations. The company will also consider hybrid instruments and returning to the equity markets as it grows and needs more capital for acquisitions.

The company has also managed market volatility by selling assets. For example, it sold a minority interest in a New York license to Cresco Labs (CSE: CL) (OTC: CRLBF), making three to four times on its investment.

When it comes to allocating capital, the company takes a disciplined approach. Jushi does a significant amount of analysis to understand the cash flow of anything it is opening or buying. The company also focuses on controlling operating costs.

2020 Guidance

Jushi has given guidance fore exiting 2020 with a run-rate of $150 to $180 million. That growth, according toCacioppo, will be driven by store openings in Pennsylvania, the closing of a San Diego acquisition, the opening of a Santa Barbara store, the transition of medical stores to recreational in Illinois, and opening new recreational stores in Illinois. Though there is some uncertainty due to regulatory timing, Cacioppo is confident in the companys track record of opening stores. He expects to see organic growth on top of store openings as activity increases in states like Pennsylvania and Illinois.

In 2020, Cacioppo recommends investors watch Jushis quarterly revenue run rate. Moving into 2021, the company is expected to reach cash flow and its breakeven point, and investors can begin to watch the companys margins, as well as continued revenue growth.

Jushi, like the rest of the industry, is challenged by regulatory uncertainty and rapidly scaling operations, but Cacioppo is confident in the strength of his companys management team and its balance sheet.

To learn more, visit the Jushi website. Listen to the entire interview:

February 19, 2020
 

In October,Gibraltar Industries (NASDAQ: ROCK) purchased CO2 extraction company Apeks Supercritical, paying $12.55 million for the Ohio-based company that reported trailing annual revenue through June 2019 of $17.7 million. This move extended the company’s involvement in the cannabis industry, where it has also worked on green house facilities.

On February 14th, the company revealed an even larger acquisition of California-based Delta Separations, paying $50 million cash for the privately-held manufacturer of ethanol-based extraction systems. Gibraltar disclsoed that the acquired company generated 2019 revenue of $46 million.

As Gibraltars second acquisition in the processing market, Delta Separations leadership position in ethanol-based extraction technology combined with Apeks leadership position in CO2extraction technology expands our offering as we work with customers to shape the future of this market. The combination of Apeks and Delta will support our customers regardless of their technology and systems preference.

Gibraltar Chief Executive Officer Bill Bosway

Delta has a strong management team, is a true leader in this market with an incredible passion for its business, and our future together. We will continue to build our presence and relevance with our customers accordingly.

In addition to Delta, Gibraltar acquired Teaching Tech, which is a separate company that provides training to Delta customers. According to the company’s website, Delta was founded in 2015 and has been headed by CEO Roger Cockroft and Founder/CTO Ben Stephens. Gibraltar plans to retain substantially all employees and to change the name of Teaching Tech, according to the asset purchase agreement.

Delta Separations CUP-30 Closed-Loop Alcohol Extraction System

According to the company’s website, it sells agitation, chilling, extraction, evaporation and distillation equipment as well as modular processing labs.

February 19, 2020
 

On February 11, Greenrose Acquisition Corp. (NASDAQ: GNRSU) priced a $150 million initial public offering, becoming the latest in a series of cannabis-focused blank check companies to go public. Based in Woodbury, New York, Greenrose sold 15 million units priced at $10 each. Imperial Capital LLC and I-Bankers Securities Inc. underwrote the offering.

Blank check, or special purpose acquisition corporations (SPACs), are publicly traded companies that raise money from investors to acquire an existing company, generally one that is privately held. The money is held in a trust until a merger or acquisition is identified. Because investors dont know upfront just where their money will be used, SPACs are often referred to as blank checks.

SPACs offer privately held companies an alternative to the traditional IPO through a merger or other business combination, thus saving them from having to go through the paperwork-intensive and lengthy process. If the SPAC fails to complete a merger or acquisition within the required time frame, all of the public shares are redeemed for a pro rata portion of the cash held in the trust account.

Last year, 59 blank check companies went public, raising $13.6 billion, according to SPAC Research. So far this year, eight SPACs have gone public raising $2.5 billion.

Despite some not so positive returns for several publicly traded companies, the nascent cannabis industry has been ripe for SPACs as investor excitement continues to grow. In this review, we take a look those cannabis-focused SPACs that have popped up in recent years, how much they have raised and who is behind them.

Greenrose Acquisition Corp.

Greenrose Acquisition Corp. noted in its filing with the Securities and Exchange Commission that the cannabis market is growing, but highly fragmented and undercapitalized and companies operating across multiple verticals consistently have trouble accessing capital from traditional sources.

The companys management team consists of experienced deal makers, operators, and investors who have worked in the agricultural and investment services industries, according to the SEC Filing.

They are CEO and Director William F. Harley III, who has more than 30 years of experience in the agriculture, real estate and finance industries, and Brendan Sheehan, executive vice president, corporate strategy and investor relations and director. He has more than 25 years of experience in business development, sales and operations in the finance, technology and healthcare industries.

Stable Road Acquisition Corp.

On November 13, 2019, Stable Road Acquisition Corp. (NASDAQ: SRAC) announced it closed on an IPO of $172.5 million. The New York-based company sold 17,250,000 units, including 2,250,000 units issued pursuant to the exercise by the underwriter of its over-allotment option priced at $10 per unit. Cantor Fitzgerald & Co. acted as the sole book running manager for the offering.

The company noted that its strategy is to pursue one or more business combinations with companies servicing and operating adjacent or ancillary to, the cannabis sector, but which are not directly involved in the production, distribution and sale of cannabis (i.e. businesses that touch the plant), according to its SEC filing. They include vaporization products and cannabis accessories; software, such as seed-to-sale tracking; labs; distribution; real estate; brands; and packaging.

The companys management team includes Brian Kabot, chief investment officer of Stable Road Capital, LLC, James Norris, CFO of Stable Road Capital and Juan Manuel Quiroga, chief investment officer of NALA Investments, LLC. Combined, they have more than 60 years of investment management experience. Stable Road Capital is known for being an investor in the real estate of MedMen (CSE: MMEN) (OTC: MMNFF) through its Treehouse collaboration and has made investments in the sector in companies that includeGrenco Science and Plus Products(CSE: PLUS) (OTC: PLPRF).

Brian Kabot, CIO, Stable Road Capital

Merida Merger Corp. I

On November 7, 2019, New York-based Merida Merger Corp. I (NASDAQ: MCMJ) (NEO: MMK) announced it had raised $120 million via a dual listing on the Nasdaq and Canadas NEO Exchange. It was the first SPAC to be backed by a dedicated private equity firm (Merida Capital Partners III LP) focused on investing in the cannabis industry.

Merida Capital Partners management team has worked with legal cannabis companies since 2009 and has been investing in cannabis-related companies since 2013, according to the SEC filing. Unlike some of the other cannabis SPAC leadership that have popped up in recent years, Meridas principals have helped to build and operate sophisticated cannabis cultivation facilities and have directed significant investments into a broad spectrum of cannabis-related companies ranging from data analytics companies to hydroponic suppliers.

The company is led by Peter Lee, president, CFO and director and Richard Sellers, executive vice president of mergers and acquisitions. Mitchell Baruchowitz, who is the managing member of Merida Capital Partners, is the non-executive chairman of the board of this SPAC.

Silver Spike Acquisition Corp.

Last August, New York-based Silver Spike Acquisition Corp. (NASDAQ: SSPK), announced it priced a $250 million cannabis-focused SPAC. It was incorporated as a Cayman Islands exempted company and is backed by Silver Spike Capital, an asset management fund formed in 2019 and focused on the cannabis industry.

The companys founder, Scott Gordon, also is the founder and CEO of Silver Spike Capital, which began investing in the cannabis industry in 2014. In 2016, Gordon co-founded and became chairman of Egg Rock Holdings, a holding company that invests in and operates companies in the cannabis market and is the parent company of the Papa & Barkley family of cannabis products. Other members of the team include President William Healy, CFO Gregory M. Gentile, and COO Mohammed Grimeh.

Papa & Barkley is a cannabis wellness company.

As the industry continues to transition to a new legislative and regulatory framework, we believe that many companies will need a partner that can assist in providing a level of operational and financial expertise to support their growth. Our team includes a variety of investment, operational and healthcare professionals who will provide operating, technical, regulatory and legal expertise to assist a target business access the public markets, the company stated in its SEC filing.

Ceres Acquisition Corp.

On February 5, Los Angeles, Calif.-based Ceres Acquisition Corp. filed a preliminary prospectus with Canadian regulatory authorities for a proposed public offering to raise $120 million. The company plans to trade on the NEO Exchange.

The management team includes CEO Joe Crouthers, who started a cannabis distribution and transportation company brokering sales of input materials to cannabis product manufacturers; President, CFO and Corporate Secretary Jordan Cohen, who has experience in the technology and wellness industries; and, COO Michael Vukmanovich, who got his start in the legal cannabis industry investing, advising and networking with some of the industrys top founders, according to the prospectus.

The sponsor, Ceres Group Holdings, has been investing in the industry since 2016, with stakes in Fotmer Life Sciences, a licensed cultivation company in Uruguay, vaporizer manufacturer Pax, Palms, a multi-state pre-roll brand, and Silverpeak, a Colorado operator.

We believe that our understanding of the dynamics, competitors, trends, risks, unique nature, and opportunities of the cannabis segment will enable us to efficiently pursue the industrys best opportunities and potential transactions, the company stated. It is targeting investments in the US$200-600 million range.

There are numerous other SPACs who entered the market earlier on. They include:

  • Ayr Strategies Inc. (CSE: AYR, OTC: AYRSF), formerly Cannabis Acquisition Strategies Corp., which raised C$125 million and then closed a merger with five cannabis companies across the nation.
  • Akerna Corp. (NASDAQ: KERN) , formerly MTech Acquisition Corp, which completeda merger with cannabis software maker MJ Freeway last June, initially raised US$50 million. MTech was the first US-listed SPAC focused on acquiring a business ancillary to the cannabis industry.
  • Canaccord Genuity Growth Corp. (NEO: CGGC.UN) now Columbia Care Inc., (NEO: CCHW) (OTC: CCHWF) raised C$46 million. Canaccord Genuity Growth II Corp. (NEO: CGGZ) raised C$100 million.
  • In March 2019, New York-based Tuscan Holdings (NASDAQ: THCB) raised US$240 million. Then in June of the same year, it filed for another SPAC, Tuscan Holdings II (NASDAQ: THCA), raising $172 million.
  • In May 2019, Mercer Park Brand Acquisition (NEO: BRND) announced the closing of its $402.5 million public offering. The company said it will focus on acquiring one or more cannabis companies with an estimated aggregate enterprise value of $300 million to $800 million. The sponsor, Mercer Park, had previously sponsored the SPAC that became AYR Strategies.
  • Subversive Capital (NEO: SVC) closed on a US$575 million IPO in July 2019. The following month, Bespoke Capital Acquisition Corp. (TSX: BC)closed on a US$350 million IPO.

Because so many cannabis companies are privately held, going public via a SPAC is one way to inject lots of capital into a proven company without having to start from the ground up. With these SPACs having been successfully completed, the question now becomes what will they purchase and will they be able to do it within the required deadlines.

February 18, 2020
 

LONDON, Ontario, Feb. 18, 2020 (GLOBE NEWSWIRE) — Indiva Limited (the Company or Indiva) (TSXV:NDVA) (OTCQX:NDVAF) is pleased to announce that further to its press release dated December 11, 2019, the Company has entered into a licensing and manufacturing agreement (the “Agreement”) with Dycar Pharmaceuticals Ltd. (“Dycar”). Pursuant to the Agreement, Dycar will immediately provide Indiva with non-dilutive financing of $3.6 million, $500,000 of which has been previously advanced, and an additional $4.5 million of non-dilutive financing over two instalments. Such amounts will be used to finance the production and distribution, by Indiva, of certain Dycar-branded cannabis products (the “Dycar Products”). Sale proceeds from Dycar Products will be used to repay the financing. The Company and Dycar will also share additional sale proceeds of Dycar Products pursuant to the terms of the Agreement.

We are pleased to finalize our partnership with Dycar and begin developing premium products on their behalf.

Niel Marotta, Indivas President and Chief Executive Officer

OPTION GRANT

The Company also announces that its Board of Directors has approved the grant of 2,977,333 stock options to directors, officers, employees and consultants of the Company. The options granted are exercisable into common shares of the Company at a price of $0.40 per common share in accordance with TSX Policy 4.4, subject to the rules of the TSX Venture Exchange and the Company’s Stock Option Plan. The options have a term of five years and will expire on February 18, 2025. One-third of all options will vest on the first anniversary of the grant, one-third of all options will vest on the second anniversary of the grant and the final one-third of all options will vest on the third anniversary of the grant.

ABOUT INDIVA

Indiva sets the standard for quality and innovation. Indiva aims to bring its exceptional portfolio of products to Canadians and cannabis enthusiasts around the world as laws permit. Based in London, Ontario, Indiva creates premium pre-rolls, capsules and edible products. In Canada, Indiva produces and distributes the award-winning Bhang Chocolate, Ruby Cannabis Sugar, Sapphire Cannabis Salt, Gems, and other Powered by INDIVA products through license agreements and joint ventures. Click here to connect with Indiva on social media and here to find more information on the Company and its products. Click here to connect with Indiva on social media and here to find more information on the Company and its products.

Original press release

February 18, 2020
 
Michael King (Left) and Charlie Kieley (Right)

Exclusive Interview with Kings Garden Co-Founders Michael King and Charlie Kieley

Kings Garden started five years ago in the Coachella Valley region of California. Since then, it has grown into a profitable cultivation company backed by the funding of friends and family. Founders CEO Michael King and COO Charlie Kieley spoke with New Cannabis Ventures about their companys California presence, their approach to distribution and their thoughts on the commoditization of cultivation.

The Team

King comes from a background in finance, beginning his career on Wall Street and then moving into real estate. He moved into the cannabis space approximately seven years ago. Kieley has spent the past 15 years in cannabis, owning and operating retail dispensaries and facilities. He was working in northern California but had roots in the Palm Springs and Coachella Valley area. As soon as Palm Springs began licensing commercial cannabis facilities, he came home.

King, with his financial background, and Kieley, with his operations experience, have complementary skill sets. They lead the company along with other key players including CFO Lauri Kibby, Vice President of Operations Gary LaSalle, Head of Cultivation Tyler Geld, Vice President of Distribution Jeffrey Fellbaum, Vice President of Processing/Packaging Cameron Maggalens, Chief Marketing Officer Tommy Kieley, and Vice President of Marketing Ivan Talan.

The leadership team oversees the approximately 200 employees at Kings Garden. Over the past five years, the company has been continuously building, but construction is now complete. The company may increase its personnel by 10 percent to accommodate increased production, but the team likely wont need to grow much more, according to King.

Cultivation at the Core

At its heart, Kings Garden is a cultivation company. It produces premium, indoor flower meant for consumption in its raw form, according to Kieley. In July 2018, the company launched its first SKU: a packaged eighth jar. Now, Kings Garden has 16 SKUs, all produced in-house.

Kings Garden Team Members at Work

The company owns and operates approximately 215,000 square feet of licensed space in the Coachella Valley. The location is ideal for Kings Garden not only because of Kieleys connection to the region but also because of the lower cost of operation compared to areas like Los Angeles and San Francisco. The company has more than 3000 cultivation lights and did more than 20,000 pounds last year.

The Kings Garden leadership team never had any intention of launching its own distribution operations. Instead, the team vetted the distribution players capable of handling the volume and scale their company was targeting. The list was relatively small, and Origin House was an easy selection to make, according to Kieley. He and the team see Origin Houses longstanding history of supporting brands and getting products to market, a major factor in its leading position as a distribution platform and as a strong acquisition for Cresco Labs.

Origin House handles all accounting, placing a link of separation between Kings Garden and its retailers. King and Kieley have heard about retailers struggling to pay, but they havent experienced it themselves.

Ramping Up

Kings Garden is increasing its production by approximately 30 percent, which will result in a small increase in expenses and a significant increase in revenue, according to King. Additionally, the company is increasing its manufacturing by 400 to 500 percent.

Kings Garden Manufactures Different SKUs, Including Concentrates.

Previously, the company has done significant wholesale business, but now it is shifting its resources to focus on its own branded products.

Last year, the company did $45 million with significant EBITDA, according to King. Kings Garden is targeting $70 to $80 million with an even stronger EBITDA this year. By 2021, the company is expected to be doing approximately $100 million. Those projections are rooted in the companys now-completed infrastructure. Additional lights have increased cultivation capacity, and the significant increase in manufacturing is being driven by upgraded SOPs and equipment.

The Potential for Expansion

Kings Garden is taking a cautious approach to expansion. Over the past year and a half, the team has vetted opportunities in different states but none have been the right fit yet. If the company does pursue multi-state expansion, it likely will not take the form of building operations from the ground up. Instead, management contracts or licensing may be an option. At this point, King and Kieley want to enjoy the infrastructure theyve built in California.

The company considered going public in the past, going so far as to travel to Canada and begin discussions. Ultimately, Kings Garden halted the go-public process, deciding it was the wrong decision. The company has no plans to list on a Canadian exchange, but it will consider the possibility of listing on the NYSE or NASDAQ when the time comes. For now, the company is happy to remain private, according to King.

Funding and Capital Allocation

In the beginning, King and Kieley put their own money into the companyfive years ago, a 10,000-square-foot facility. They wanted to prove to themselves that they had a working model. Once they did, the pair began to make calls to friends and family and pick up more space. Kings Garden has raised a total of $55 million from friends and family. One of the companys largest investors has put in approximately $13 million, while one of the smallest has put in about $20,000, according to King. Today, the company is profitable with debt and has begun paying dividends to its investors, according to King.

Kings Garden carefully tracks its monthly expenses (the largest being rent, electricity, and payroll) and ensures it has enough to cover those. Over the last few years, the company has also been able to invest money it has made back into its infrastructure.

The Commoditization Question

The commoditization of cannabis is a big topic of discussion in the industry, but not one that worries the Kings Garden team. Outdoor and greenhouse products grown as biomass that will ultimately be used for manufactured goods likely will become commoditized, according to Kieley. But, that is not the kind of cannabis Kings Garden grows. It produces premium, indoor cannabis for consumption by connoisseurs, and Kieley does not anticipate commoditization affecting that kind of product.

Kings Garden Focuses on Producing High-Quality Products.

Of course, the company faces other challenges common across the industry, from strict regulation to the burden of taxes. But, there is also an upside. With profitability becoming increasingly vital and capital funds drying up, bad operators will begin to failleaving behind a legitimate industry. At the end of this, we are going to have the industry we always wanted, said Kieley.

To learn more, visit the Kings Garden website. Listen to the entire interview:

February 18, 2020
 

Australis Capital Announces Termination of Merger Agreement with Folium Biosciences

LAS VEGAS, Feb. 18, 2020 /PRNewswire/ – Australis Capital Inc. (CSE: AUSA) (OTC: AUSAF) (“AUSA” or the “Company”) previously announced on, December 11, 2019, a proposed merger by and among AUSA, Folium Equity Holding LLC (“Folium”) and Folium Merger Sub, LLC by which Folium would become a wholly owned subsidiary of AUSA, and AUSA would be rebranded as and carry on the business of Folium. AUSA recently discovered new relevant information with regard to Folium and, on that basis, AUSA has decided to not proceed with the merger.

AUSA continues to lean heavily on corporate governance and our vision to navigate through an incredibly unpredictable market over the past 12 months. With over $38.2 million in cash, liquid assets, and other assets that can easily be converted into cash within a short amount of time and $5.2 million annual burn excluding charges from capital projects and one-time occurrence, AUSA has a very strong financial position.

Scott Dowty, CEO of AUSA

With 18 months of operating experience behind us, we are excited about the future and eager to execute on our strategy starting with our corporate update on February 26, 2020.

A trading halt on AUSA stock was issued in accordance with the policies of the Canadian Stock Exchange (“CSE”) at the time of the announcement of the proposed merger agreement. As the transaction will not proceed, trading is expected to resume on the CSE and OTC shortly.

AUSA is hosting a corporate update call at 1:00 PM EST on Wednesday, February 26, 2020. The conference call may be accessed by dialing 1.888.396.8094 (Toll-Free North America) or 1.416.764.8649 (Canada).

About Australis Capital Inc.

AUSA operates and builds transformative, differentiated cannabis companies predominantly in the United States, a highly-regulated, fragmented, and rapidly expanding industry. AUSA adheres to stringent evaluation and operating criteria focusing on high-quality opportunities while maintaining a steadfast commitment to governance and community. AUSA’s Board and management team have material experience with, and knowledge of, the cannabis space in the U.S., extensive backgrounds in highly-regulated industries and regulatory compliance. AUSA operating and portfolio assets include Rthm Technologies Inc., Body and Mind Inc., Quality Green Inc., Mr. Natural Inc., Green Therapeutics, LLC., and Cocoon Technology LLC.

The Company’s Common shares trade on the CSE under the symbol “AUSA” and on the OTCQX under the symbol “AUSAF”.

For further information about AUSA, please visit the website at ausa-corp.com or contact the Company by e-mail at ir@ausa-corp.com.

Original press release

February 17, 2020
 
In a setback for Iowas small and limited medical cannabis program, state regulators rejected recommendations to add two more qualifying conditions for those who could be treated with MMJ
February 17, 2020
 
Marijuana companies are now the single largest sponsors of Colorado highway clean-ups
February 17, 2020
 
As a growing number of Canadian cultivation license holders retreat from costly greenhouse expansions, more applicants than ever are readying lower cost outdoor cannabis projects
February 16, 2020
 

You’re reading a copy of this week’s edition of the free New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015.

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Friends,

With three reports from some of the largest Canadian LPs over the past few days, we have now had six so far in 2020, including Aphria, Aurora Cannabis,Canopy Growth, Hexo, Organigram and Supreme Cannabis. One of the first things investors look at is the top-line number, revenue, and recent financial reports suggest to us that there are several reasons to examine the sources of revenue more closely. Simply said, not all revenue is the same, and we think there are at least three issues with which investors should be familiar.

Non-Cannabis Revenue

Several LPs have acquired businesses that are outside of cannabis cultivation, processing or sale or even related ancillary services and products. Aphria, for example, derives the majority of its revenue from distribution of European pharmaceuticals. Tilray acquired Manitoba Harvest, which is a hemp food provider. Canopy Growth’s fiscal Q3 report included revenue from the recent acquisition of This Works, a skincare company it acquired for $74 million last May as a platform for CBD cosmetics. The company didn’t break out the amount of revenue, but it grew 42% from the prior quarter. Additionally, it included an undisclosed amount of revenue from its recent acquisition of BioSteel Sports Nutrition, which is also non-cannabis. Finally, revenue is substantial from its C3 unit that it acquired for C$343 million last April, with Q3 sales up 3% from Q2 to $14.8 million. The company doesn’t break it out, but the sales include both extracted cannabis and synthetic cannabinoids, and we estimate that the vast majority of revenue is from synthetic THC. We would suggest that investors value the synthetics, which are essentially a generic drug, at substantially less than how they value natural cannabis.

We propose that rather than using a simple price to sales or projected sales metric that investors break up the businesses and apply an appropriate metric to eachsegment. For example, Aphria paid just18.92 million upfront with an additional 23.5 millionwhen performance milestones were met for CC Pharma in early 2019, which it said had generated revenue ofof approximately 262 million, with EBITDA of approximately 10.5 million in 2018. This worked out to be just 0.16X trailing revenue, and investors should treat it very differently than they do the cannabis business, which presumably has much higher margins.For the benefit of our readers, we include only cannabis-related revenue, when it can be clearly broken out, in thePublic Cannabis Company Revenue & Income Tracker.

Wholesale Revenue

LPs generate cannabis revenue in a variety of ways, including selling into the provinces for adult-use, Canadian medical cannabis, international medical cannabis, retail sales through stores and also wholesale sales to other LPs.Canopy Growth, for example, broke out its fiscal Q3, revealing overall direct cannabis gross revenue to be 52% adult-use, 15% retail stores, 14% Canadian medical and 18% international medical. On the call, management said almost no revenue was attributed to wholesale.

Two companies that saw big swings in their revenue from changes in wholesale were Aurora Cannabis and Organigram. Aurora Cannabis was negatively impacted by lower wholesale revenue in its fiscal Q2, with a decline from $10.3 million to just $2.4 million. Organigram was positively impacted, as it saw a jump in its fiscal Q1 to $9.2 million from less than $600K during its fiscal Q4. Its gross margin and pricing were quite high in this part of their business, but it can be difficult to sustain wholesale activity absent long-term supply agreements, which means that investors should expect potential volatility in this part of the business.

Returns

One of the pitfalls of the provincial distribution model for adult-use is that suppliers are at the mercy of their single customer, the province, unlike in medical cannabis, where the customer is the individual. For the past few quarters, returns and provisions for returns have had a major impact on reported revenue for most LPs. Canopy Growth reported net revenue of $123.4 million for its fiscal Q3, which represented sequential growth of 62%. The reason for the big gain from Q2 was that the company took a $32.7 million revenue adjustment for returns and pricing adjustments in the prior quarter,as the company clearly detailed in its press release and financials. In Q3, the adjustments were just $5.3 million. The company’s sequential growth, without those adjustments, would have been a still healthy 13%.

Pricing adjustments and returns hit the P&L of the LPs in a single quarter, but they correct for revenue that was recognized in prior quarters. In our view, investors should be careful to understand this point. For example, Aurora Cannabis reported revenue looked even weaker than it was due to pricing adjustments and returns that hit the P&L in its fiscal Q2 that amounted to 16% of the $66.6 million it would have reported absent that factor. The company reported a sequential decline in cannabis net revenue of 26%. Had it taken the hit in Q1 rather than Q2, then it would have reported 5% positive growth in cannabis net revenue.

Bottom Line

We have seen several analysts apply valuation metrics to overall revenue, without taking into account some of the issues we have highlighted, in particular the non-cannabis revenue aspect. We suggest that investors should be cautious to avoid overvaluing companies that have substantial non-cannabis revenue or that are overly reliant upon the volatile wholesale channel. At the same time, we advocate being mindful with how one looks at growth when there are returns and pricing adjustments during the quarter or in prior quarters.


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Sincerely,

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February 15, 2020
 
A New Mexico Senate panel scraps legislation to legalize recreational marijuana, Aurora Cannabis reports a steep loss for its second quarter, President Trumps 2021 budget proposal seeks additional money for the federal government to regulate hemp and CBD - and more of the weeks top cannabis business news
February 14, 2020
 
Marijuana Business Dailyis seeking input from cannabis industry executives and investors that will help shape the marijuana industry
February 14, 2020
 
A Nevada marijuana testing lab inflated THC levels on cannabis products by as much as 10%, according to a settlement agreement approved by state regulators
February 14, 2020
 
Canadian marijuana giant Canopy Growth reportedfiscal third-quarter net revenuethat soared 62% from the second quarter, jumped 49% from its third quarter in 2019 and drove up its stock by double-digit figures
February 14, 2020
 
Viroj Sumyai, a former head of the United Nations body responsible for international drug treaty compliance, has been hired as president of Thailand's leading medical cannabis company
February 14, 2020
 

Independent registration from the global public health organization underlies commitment to dietary supplement quality and compliance with U.S. GMP requirements

BOULDER, CO, Feb. 14, 2020 /PRNewswire/ – Charlotte’s Web Holdings, Inc. (“Charlotte’s Web” or the “Company”) (TSX: CWEB,OTCQX: CWBHF), the market leader in hemp extract products with naturally occurring cannabidiol (CBD), is pleased to announce that its manufacturing facility in Boulder, Colorado was recently added to NSF International’s dietary supplements Good Manufacturing Practice (GMP) registration. Earning GMP registration from NSF International verifies that a manufacturing facility has the proper methods, equipment, facilities, and controls in place to produce dietary supplement products.

Our commitment to attaining industry recognized certifications underlies the trust we have earned from our consumer, retail and regulatory partners.

Deanie Elsner, CEO of Charlotte’s Web Inc.

The registration is important for supporting certain potential new business partnerships. As industry leaders, attaining NSF GMP certification marks another important milestone for Charlotte’s Web and we look forward to prominently displaying our new NSF certificate at our manufacturing facility in Boulder.

The NSF GMPs were developed in accordance with the U.S. Food and Drug Administration’s (FDA) 21 CFR part 111 regulation on dietary supplement manufacturing, packaging, and distribution.

With scientific expertise and decades of experience in testing and certification in the relevant product categories, NSF International is uniquely qualified to serve the fast-growing hemp industry in the United States and help protect consumers who use these products.

“We’re very pleased to grant NSF GMP registration to this Charlotte’s Web manufacturing facility,” said David Trosin, Managing Director and Global Business Development Director, Health Sciences at NSF International.

About NSF

NSF International is a global public health organization that facilitates new language standards, and tests and certifies products for the water, food, health sciences and consumer goods industries to minimize adverse health effects and protect the environment. Founded in 1944, NSF is committed to protecting human health and safety worldwide. With operations in more than 175 countries, NSF International is a Pan American Health Organization/World Health Organization (WHO) Collaborating Center on Food Safety, Water Quality and Indoor Environment.

About Charlotte’s Web Holdings, Inc.

Charlotte’s Web Holdings, Inc. is the market leader in the production and distribution of innovative hemp-derived cannabidiol (“CBD”) wellness products. Founded by the Stanley Brothers, the Company’s premium quality products start with proprietary hemp genetics that are responsibly manufactured into hemp-derived CBD extracts naturally containing a full spectrum of phytocannabinoids, including CBD, terpenes, flavonoids and other beneficial hemp compounds. Charlotte’s Web product categories include CBD oil tinctures (liquid products), CBD capsules, CBD topicals, as well as CBD pet products. Charlotte’s Web hemp-derived CBD extracts are sold through select distributors, brick and mortar retailers, and online through the Company’s website at www.CharlottesWeb.com. The rate the Company pays for agricultural products reflects a fair and sustainable rate driving higher quality yield, encouraging good farming practices, and supporting U.S. farming communities. Charlotte’s Web products are certified by the U.S. Hemp Authority.

Charlotte’s Web is a socially conscious company and is committed to using business as a force for good and a catalyst for innovation. The Company weighs sound business decisions with consideration for how its efforts affect its employees, customers, the environment, and the communities where its employees live and where it does business, while maximizing profits and strengthening its brands. The Company’s management believes that socially oriented actions have a positive impact on the Company, its employees and its shareholders. Charlotte’s Web donates a portion of its pre-tax earnings to charitable organizations.

Shares of Charlotte’s Web trade on the Toronto Stock Exchange (TSX) under the symbol “CWEB” and are quoted in U.S. Dollars in the United States on the OTCQX under the symbol “CWBHF”. As of January 1, 2020, Charlotte’s Web had 67,418,174 Common Shares outstanding and 95,342.49 Proportional Voting Shares convertible at 400:1 into Common Shares, for an effective equivalent of 105,555,170 Common Shares outstanding.

Original press release

February 14, 2020
 

Visit the Canopy Growth Corp Investor Dashboard and stay up to date with data-driven, fact based due diligence for active traders and investors.

Canopy Growth Reports Third Quarter Fiscal 2020 Financial Results
  • Generated $124 million Net Revenue, up from $76 million in Q2 2020
  • Excluding portfolio restructuring charges in Q2 2020, Net Revenue up 13%
  • Achieved Gross Margin of 34%
  • Total Operating Expenses down 14% versus the prior quarter
  • Adjusted EBITDA loss decreases to $92 million

SMITHS FALLS, ON, Feb. 14, 2020 /PRNewswire/ – Canopy Growth Corporation (“Canopy Growth” or the “Company”) (TSX: WEED) (NYSE: CGC) today announced its financial results for the third quarter ended December 31, 2019. All financial information in this press release is reported in millions of Canadian dollars, unless otherwise indicated.

Third Quarter Fiscal 2020 Corporate Financial Highlights

  • Revenues: Reported Net Revenues increased 62% over Q2 2020, or 13% excluding the impact of portfolio restructuring charges. Gross Recreational B2B revenue increased 8% over prior quarter due, in part, to over 140 stores becoming active in the quarter and higher sales of premium dried flower and pre-roll joints. Our acquired businesses including Storz & Bickel and This Works also performed well, contributing to organic growth this quarter.
  • Gross margin: Gross margin before fair value impacts was 34%. Gross margin performance in quarter benefited from lower period costs due to higher facility utilization
  • Operating expenses: Total operating expenses decreased 14% versus Q2 2020 primarily due to a $20 million reduction in G&A expenses and over $31 million lower stock-based compensation versus the prior quarter
  • Adjusted EBITDA: Adjusted EBITDA loss of $92 million, a $64 million narrower loss versus Q2 2020 driven by higher sales, improved gross margins and lower operating expenses
  • Cash Position: Gross cash balance was $2.3 billion, down from $2.7 billion in Q2 2020, reflecting the EBITDA loss, capital investments and M&A

Third Quarter Fiscal 2020 Business & Operational Highlights

  • Maintained leading market share in retail, at an estimated 22%, of the Canadian recreation market as we saw a strong demand for both premium and value priced dried flower and pre-rolled joints
  • Continued market share gains and increase in the number of patients, to over 76,700, in the Canadian medical cannabis market
  • Named David Klein as new Chief Executive Officer
  • Completed first shipments of cannabis-infused edible chocolates and JUJU Power 510 batteries in December 2019
  • Storz & Bickel expanded product line with launch of Crafty+ vaporizer in November 2019
  • Announced initial line of First & Free Hemp-derived CBD products and began sales online through www.firstandfree.com, one quarter ahead of Q4 2020 target

In Q3 we executed across Canada, in our international markets and in our strategic acquisitions to drive revenue growth. We have a lot of work to do. We are eager to capitalize on the opportunity to create an unassailable position through a tight focus on the consumer and on critical markets.

David Klein, CEO

“We delivered significant gross improvement in the third quarter driven by stronger revenues and higher capacity utilization. Actions taken earlier this year are expected to meaningfully reduce stock-based compensation in FY21, and we have started to implement tighter cost controls across the organization,” said Mike Lee, EVP & CFO. “We plan to take further steps to reduce our costs and right-size our business to ensure that we can generate a healthy margin profile and cash generation in the coming years.”

Canadian Cannabis

  • Recreational B2B sales increased 8% over Q2 2020, due to over 140 stores becoming active in the quarter and higher sales of premium dried flower and pre-roll joints
  • Recreational B2C sales increased 16% over prior quarter, due in part to an 11% increase in same store sales
  • Medical sales increased 5% over the prior quarter primarily attributable to the broadening of our brand and product offerings, including the availability of products from additional CraftGrow partners, as well as an increase in number of customers to over 76,700.

International Cannabis

  • C3 revenue increased 5% over Q2 2020
  • Germany cannabis sales higher than expected due to opportunistic sales into the German market to fill a supply gap that resulted from a regulatory enforced sales halt of cannabis products offered by another vendor

Strategic Acquisitions

  • Storz & Bickel vaporizer revenue increased 46% over Q2 2020 due to solid organic growth and seasonal sales
  • This Works revenue increased 42% over prior quarter due to strong organic growth

Non-IFRS Measures

Gross margin percentage, before fair value impacts in cost of sales, a non-IFRS measure, is a key operational metric that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. This measure is calculated as net revenue less inventory production costs expensed to cost of sales, divided by net revenue, and may be computed from the consolidated statements of operations presented within this news release.

Adjusted EBITDA, a non-IFRS measure, is a key operational metric that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. Adjusted EBITDA is calculated as earnings before interest, tax, depreciation and amortization, share-based compensation expense, fair value changes and other non-cash items, and further adjusted to remove acquisition-related costs. The Company attributes Adjusted EBITDA to its operations and corporate overhead, strategic investments and business developments, and non-operating or under-utilized facilities. The Adjusted EBITDA reconciliation is presented within this news release and explained in Management’s Discussion & Analysis under “Adjusted EBITDA (Non-IFRS Measure)”, a copy of which will be filed on SEDAR.

Free Cash Flow, a non-IFRS measure, is a key operational metric that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. This measure is calculated as net cash provided by (used in) operating activities less purchases and deposits of property, plant and equipment.

Transition to U.S. GAAP Reporting

As part of our U.S. financial reporting requirements, Canopy Growth confirmed that, as of September 30, 2019, it no longer met the criteria for qualification as a foreign private issuer because (1) more than 50% of the outstanding voting securities are held by residents of the United States, and (2) the majority of Canopy Growth’s directors are United States citizens.

Therefore, as of April 1, 2020 Canopy Growth will be considered a United States domestic issuer and a large accelerated filer. As a result of this change, as of April 1, 2020, Canopy Growth will be required to prepare its consolidated financial statements, including the Company’s March 31, 2020 audited annual consolidated financial statements, in conformity with United States generally accounting principles, with such change being applied retrospectively. The extent of the impact of this change in accounting framework has not yet been quantified. Canopy Growth will also be required to provide an auditor attestation report under Section 404(b) of the Sarbanes-Oxley Act.

This press release is intended to be read in conjunction with the Company’s Unaudited Condensed Interim Consolidated Financial Statements (“Financial Statements) and Management Discussion & Analysis (“MD&A) for the three and nine months ended December 31, 2019, which will be filed on SEDAR (www.sedar.com) and will be available at www.canopygrowth.com. The basis of financial reporting in the Financial Statements and MD&A is in thousands of Canadian dollars, unless otherwise indicated.

Webcast and Conference Call Information

The Company will host a conference call and audio webcast with David Klein, CEO and Mike Lee, CFO at 10:00 AM Eastern Time on February 14, 2020.

Webcast Information

A live audio webcast will be available at:
https://event.on24.com/wcc/r/2171215/8311836AC24F7988B042B4BB0FA5622A

Replay Information

A replay of the call will be accessible by webcast, until 11:59 PM ET on May 14, 2020, at
https://event.on24.com/wcc/r/2171215/8311836AC24F7988B042B4BB0FA5622A

About Canopy Growth Corporation

Canopy Growth (TSX:WEED,NYSE:CGC) is a world-leading diversified cannabis, hemp and cannabis device company, offering distinct brands and curated cannabis varieties in dried, oil and Softgel capsule forms, as well as medical devices through the Company’s subsidiary, Storz & Bickel GMbH & Co. KG. From product and process innovation to market execution, Canopy Growth is driven by a passion for leadership and a commitment to building a world-class cannabis company one product, site and country at a time. The Company has operations in over a dozen countries across five continents.

The Company’s medical division, Spectrum Therapeutics is proudly dedicated to educating healthcare practitioners, conducting robust clinical research, and furthering the public’s understanding of cannabis, and has devoted millions of dollars toward cutting edge, commercializable research and IP development. Spectrum Therapeutics sells a range of full-spectrum products using its colour-coded classification Spectrum system as well as single cannabinoid Dronabinol under the brand Bionorica Ethics.

The Company operates retail stores across Canada under its award-winning Tweed and Tokyo Smoke banners. Tweed is a globally recognized cannabis brand which has built a large and loyal following by focusing on quality products and meaningful customer relationships.

From our historic public listing on the Toronto Stock Exchange and New York Stock Exchange to our continued international expansion, pride in advancing shareholder value through leadership is engrained in all we do at Canopy Growth. Canopy Growth has established partnerships with leading sector names including cannabis icons Snoop Dogg and Seth Rogen, breeding legends DNA Genetics and Green House Seeds, and Fortune 500 alcohol leader Constellation Brands, to name but a few. Canopy Growth operates eleven licensed cannabis production sites with over 5.2 million square feet of production capacity, including over one million square feet of GMP certified production space. For more information visit www.canopygrowth.com

Original press release

February 14, 2020
 
Several states could expand their medical cannabis programs this year through new laws or regulatory policies, opening the door to additional business licenses, more sales for existing cannabis operators and fresh business for ancillary companies
February 13, 2020
 

cbdMD Reports Record First Quarter Fiscal 2020 Net Sales of $10.14 Million

CHARLOTTE, N.C., February 13, 2020–(BUSINESS WIRE)–cbdMD, Inc. (NYSE American: YCBD, YCBD PR A) (the Company), a leading cannabidiol (CBD) consumer brands company, reported today its first fiscal 2020 quarter ended December 31, 2019 results, the highlights of which were:

  • The Company reported record net sales of $10,148,236, a year-over-year quarterly increase of approximately 285% (which is based upon the pre-acquisition and post-acquisition net sales of the brand which the Company acquired in late December 2018).
  • The Company reported its net sales for the quarter were approximately 67% through its e-commerce channel and 33% through its retail brick and mortar channel.
  • The Company reported its gross profit margin as a percent of net sales were 63.5% as compared to 64.4% in prior year same period and an improvement from our last quarter ending September 30, 2019, which was 56.7%.
  • The Company reported a quarterly loss from operations of $6,112,598, of which approximately $965,000 was non-cash items. Total operating expenses related to marketing, advertising, sponsorship and affiliate commissions were approximately $5 million for the quarter, of which $1.2 million was an accelerated license fee for the Life Time Fitness Agreement.
  • The Company reported a $16,898,006 decrease in the Companys non-cash contingent liability and net income before provision for income tax of $10,730,665.
  • The Company reported net income for the first quarter of fiscal 2020 of $12,863,029 or $0.45 cents per diluted share.
  • The Company reported $3,661,210 in cash at December 31, 2019, which gave no effect to the subsequent follow-on firm commitment common stock offering which resulted in approximately $16.9 million of net proceeds on January 14, 2020.

cbdMD is reporting another record quarter of revenue growth, we are fully financed and expect to achieve cash flow breakeven by the end of this fiscal year. In calendar 2019, our first full year of CBD sales, we generated over $33 million in total net sales, which was well ahead of our initial expectations of $20 million.

Martin Sumichrast, Chairman and co-CEO of the Company

We believe that we have built two of the leading CBD brands in America, cbdMD and Paw CBD. While our common share price has been negatively impacted by the current investor sentiment in the cannabis sector, we believe we are a bright spot in the overall industry.

We continue to drive online sales through the use of various digital marketing tactics, athlete and major league partnerships, and high traffic affiliate programs. Currently we have over 222,000 active e-commerce subscribers, an increase of over 10% since last quarter. On the brick and mortar side of our business, we are growing the amount of retail stores who currently carry our brands. Our retail reach is now over 5,300 retail doors, an increase of over 1,000 doors since last quarter and we have also increased our international presence and are now currently selling to wholesale customers in 16 international markets, up from 10 last quarter, continued Mr. Sumichrast.

During calendar 2019, we invested heavily in brand development and acquiring brand building assets as well as our physical infrastructure with full scale manufacturing, distribution and warehousing facilities. During calendar 2020, our focus is on deploying and activating these assets while containing our overall advertising and marketing costs. We continue to invest in R&D and testing to ensure the safety and quality of our products. Every batch of finished goods are tested with a full panel by an ISO certified testing laboratory to ensure the quality and purity, as well as to ensure we meet our label claims for potency, continued Mr. Sumichrast.

Our brands have also received leading brand recognition in the CBD industry. In July, 2019, the Brightfield Group, one of the leading predictive analytics and market research firms for the legal CBD industry, named cbdMD a Top 10 domestic brand in two booming categories, Topicals and Skincare/Beauty. In November 2019, in a newly released survey conducted by Brightfield of more than 3,500 CBD users, cbdMD ranked the highest in terms of overall consumer satisfaction as well as the highest in unaided consumer awareness of any of the top 20 CBD brands. In the animal health side of our business, Paw CBD was recently ranked by the Brightfield Group as one of the top five brands in the animal CBD market. Most recently, we announced a plan to start a joint venture with holistic pet foods leader Halo, Purely for Pets (Halo), a premium, natural pet food brand with a rich 30-year operating history, added Mr. Sumichrast.

CONFERENCE CALL DETAILS

Thursday, February 13, 2020, 4:15 p.m. Eastern Time

Domestic: 1-844-602-0380

International: 1-862-298-0970

Replay dial in Available through January 18, 2020

Domestic: 1-877-481-4010

International: 1-919-882-2331

Replay ID: 56986

Webcast Replay link available through March 18, 2020: https://www.investornetwork.com/event/presentation/56986

About cbdMD, Inc.

cbdMD, Inc. (NYSE American: YCBD and NYSE American: YCBD PR A) owns and operates the nationally recognized consumer cannabidiol (CBD) brand cdbMD, whose current products include CBD gummies, CBD tinctures, CBD topical, CBD bath bombs, CBD oils and CBD pet products. cbdMD, Inc. is a nationally recognized consumer cannabidiol (CBD) brand whose current products include CBD tinctures, CBD gummies, CBD topicals, CBD bath bombs, and CBD pet products. cbdMD is also the proud partner with the Big 3 Basketball League, Barstool Sports, Bellator MMA, (a subsidiary of Viacom: NASDAQ:VIA), Life Time Fitness and Nitro Circus. To learn more about cbdMD, Inc. and our comprehensive line of over 100 SKUs of U.S. produced, THC-free CBD products, please visit: www.cbdmd.com or follow cbdMD on Instagram and Facebook or visit one of the over 4,000 retail outlets that carry cbdMD products.

Original press release

February 13, 2020
 

TORONTO, Feb 13, 2020 /PRNewswire/ – Humble & Fume Inc. (“humble+fume” or the “Company”), one of North America’s leading distributors of cannabis accessories, is pleased to announce that it has entered into a landmark sales agency agreement with The Supreme Cannabis Company, Inc. (“Supreme Cannabis”) (TSX: FIRE) (OTCQX: SPRWF) (FRA: 53S1) whereby humble+fume will act as the exclusive sales agent for Supreme Cannabis’ recreational products across Canada, creating the only sales force in Canada able to offer a complete solution of cannabis brands and accessories to retailers.

With the acceleration of retail store openings across Canada and more consumers making their purchases and purchasing decisions in store, cannabis companies are increasingly recognizing the importance of having a presence at the retail level to help drive cost-effective revenues and ensure cannabis customers have informed purchasing experiences. This partnership with Supreme Cannabis firmly positions humble+fume as the only sales agency in Canada with a complete offering of cannabis brands and accessories sold coast-to-coast.

Through this partnership, humble+fume will build Supreme Cannabis’ brands at a store level, with an initial team of 14 sales professionals driving distribution, brand advocacy and budtender education. Supreme Cannabis’ brand portfolio includes Blissco, Sugarleaf and its premium, award-winning, 7ACRES brand as well as brand partnerships with Pax Labs and KKE. Under these brands, Supreme Cannabis has launched and will continue to introduce a diverse range of products, including cannabis flower, pre-rolls, vaporizer products, concentrates and THC and CBD oils. Supreme Cannabis’ brands and products are complementary to humble+fume’s existing product portfolio, which includes FUME LABS’ high quality line up of cannabis concentrate and solventless products as well as a deep list of leading brands in the accessory category, including RYOT, GRAV, PULSAR, and Canadian Lumber.

humble+fume is excited to have been chosen by Supreme Cannabis to be their coast-to-coast sales solution partner. With the rapid expansion of retail outlets in Canada, this well-timed sales agent agreement enables us to accelerate our retailer market coverage and build on our existing distribution to 85 percent of cannabis retailers across Canada.

Bob Ritchot, humble+fume’s CEO

Our team’s successful relationships with both government and private retailers is the result of a strong customer orientation and ability to use our portfolio to maximize returns for retailers. Through the execution of this partnership, humble+fume has become an industry-leading sales agency, which will enable us to support retailer’s needs in high growth cannabis categories.

humble+fume and Supreme Cannabis will look for opportunities to enhance this sales offering with the addition of other complementary cannabis brands. Expanding the sales agreement to additional partners allows for further cost synergies and establishes a more compelling and complete solution for cannabis retailers.

About humble+fume

humble+fume is the leading distributor of cannabis accessories in Canada. The Company offers a turnkey solution allowing the end-to-end production and distribution of cannabis concentrate products. humble+fume’s customers include 85 percent of cannabis retailers in Canada, multiple Licensed Producers, and key government partners. The Company distributes accessories across all 10 Provinces and is a category leading supplier with the OCS, SQDC, NSLC, BCLDB, NBLC, PEIC. Humble & Fume Inc. also has a rapidly expanding presence in the United States, where it operates multiple distribution facilities which provide national sales capabilities. humble+fume offers the largest selection of grinders, papers, pipes, and vaporizers, as well as storage, cleaning and other accessories. Through Humble & Fume Inc’s comprehensive North American sales and distribution network and over 20 years of operational experience and expertise, the Company has aspirations to become the preeminent distributor of cannabis-related products in North America.

To learn more about humble+fume and its industry-leading product portfolio, please visit the Company’s website at http://www.humbleandfume.com/.

About Supreme Cannabis.

The Supreme Cannabis Company, Inc., (TSX: FIRE) (OTCQX: SPRWF) (FRA: 53S1), is a global diversified portfolio of distinct cannabis companies, products and brands. Since 2014, the Company has emerged as one of the world’s fastest-growing, premium plant-driven lifestyle companies. Supreme Cannabis’ portfolio of brands caters to diverse consumer experiences, with brands and products that address recreational, wellness, medicinal and new consumer preferences.

The Company’s brand portfolio includes, 7ACRES, Blissco, Truverra, Sugarleaf by 7AC and Khalifa Kush Enterprises Canada. Supreme Cannabis’ brands are backed by a focused suite of world-class operating assets that serve key functions in the value chain, including, scaled cultivation, value-add processing, centralized manufacturing and product testing and R&D. Follow the Company on Instagram, Twitter, Facebook, LinkedIn and YouTube.

We simply grow better.

SOURCE humble+fume

Original press release

February 13, 2020
 

Visit The Supreme Cannabis Company Investor Dashboard and stay up to date with data-driven, fact based due diligence for active traders and investors.

Supreme Cannabis Announces Q2 2020 Financial Results and Updated Plan for Accelerated Revenue Growth
  • Focuses business on accelerated, near-term revenue growth with enhanced, coast-to-coast sales partnership with humble+fume
  • Enhanced cost structure and near-term revenue generating opportunities expected to drive profitable growth
  • Reports 17% year-over-year net revenue growth and maintains a strong liquidity position with total cash and restricted cash balance of $55 million with $35 million of undrawn capacity on the Companys Credit Facility

TORONTO, February 13, 2020 The Supreme Cannabis Company, Inc. (Supreme Cannabis or the Company) (TSX: FIRE) (OTCQX: SPRWF) (FRA: 53S1) today announced its financial and operating results for the three and six months ended December 31, 2019, as well as an update on its strategy and outlook.

As announced on February 11, 2020, Supreme Cannabis has implemented a new operating structure, including staff reductions, to drive efficiencies and support long-term, profitable growth. With an optimized cost structure in place, the Company is moving forward with its strategy to transition to a premium cannabis CPG company, driving near-term revenue with new high-quality brands and products at every price segment. This expanded, consumer-facing brand portfolio is being supported by an innovative sales model that achieves comprehensive distribution across Canada.

As we realign our structure and expectations with the current state of the industry, I maintain my strong belief in Supreme Cannabis ability to drive near-term revenue growth, profitability and long-term value with new high-quality brands and products at every key price segment, said Colin Moore, Director and Interim President and CEO. Im proud of the teams progress and difficult work rightsizing the Companys cost structure and focusing the business on near-term revenue drivers. As one of the few licensed producers with completed cultivation infrastructure and in-house value-added processing capabilities, as well as proven premium brands in the recreational market, we are well positioned to accelerate our CPG-focused transition. Our strong liquidity position, including the Credit Facility arranged by a tier one bank, further ensures we have the capital necessary to execute going forward.

In the quarter, Supreme Cannabis built on the success of its premium 7ACRES brand with the launch of the Companys first pre-rolls under Sugarleaf by 7AC (Sugarleaf). The Sugarleaf brand will addresses a mid-tier price point and continue to introduce products that offer more convenient and accessible consumption experiences. In the remainder of fiscal 2020, Supreme Cannabis will further expand its brand portfolio to capture additional market share and drive revenue growth with recreational brands that address the ultra-premium and value segments. Products launched under these brands will drive incremental sales volumes by growing and sourcing additional cannabis inputs not intended for 7ACRES premium products.

Supreme Cannabis also expanded distribution of its 7ACRES brand to all 10 Canadian provinces last quarter. The Company is addressing this national revenue opportunity through an enhanced retail sales strategy and partnership with Humble & Fume Inc. (humble+fume), a leading distributor of cannabis accessories in Canada. Under a comprehensive sales representation and cost-sharing agreement, humble+fume will act as a sales agent for Supreme Cannabis recreational products across Canada, creating the only sales force in Canada able to offer a complete solution of cannabis brands and accessories to retailers. Supreme Cannabis will efficiently and effectively achieve coast-to-coast sales coverage and build brands at a store level, with an initial team of 14 sales professionals driving distribution, brand advocacy and budtender education.

With the number of retail stores in Canada quickly growing and cannabis consumers making their purchase decisions in store, having representation at the individual store level provides an essential opportunity for our business to drive near-term revenue growth and support our transition to a cannabis CPG company.

Colin Moore, Director and Interim President and CEO

Our partnership with humble+fume allows us to realize industry-leading sales coverage and focus our sales and marketing efforts at the most impactful stage of the cannabis consumers journey. We enter the second half of 2020 focused on the opportunity to address the Canadian market with competitive consumer brands supported by an unmatched sales force.

Select Financial and Operational Results

Net Revenue

Net revenue increased year-over-year by 17% from $7.7 million in Q2 2019 to $9.1 million in Q2 2020 and decreased quarter-over-quarter by 21% from $11.4 million in Q1 2020. The quarter-over-quarter decrease in net revenue is primarily attributable to the Companys planned transition from a focus on wholesale to recreational sales. In the quarter, lower wholesale sales were partially offset by the increase in recreational sales. Net revenue was also impacted by actual and anticipated price adjustments of $0.5 million.

In Q2 2020, wholesale sales accounted for 38% of net revenue compared to 54% in Q1 2020. Supreme Cannabis remaining wholesale flower supply agreements came to an end, which contributed to lower quarter-over-quarter wholesale selling prices and sales volumes. Despite this factor and market-wide wholesale price compression, Supreme Cannabis continued to achieve favourable wholesale pricing, with an average wholesale flower price of $3.26 per gram. As the Company advances its transition to a CPG focus, it will continue to opportunistically supplement recreational sales with attractive wholesale transactions.

Recreational sales in Q2 2020 reached $5.7 million and, as a percentage of net revenue, increased from 46% in Q1 2020 to 62% in Q2 2020. In the quarter, recreational sales were impacted by market conditions, including slower than expected store roll-outs in key Canadian provinces. Recreational net revenue was also impacted by a lower than expected contribution from the Companys other businesses. Recreational net revenue for Q2 2020 was comprised of $5.0 million from 7ACRES products and $0.7 million from Blissco products. Supreme Cannabis continued to achieve strong recreational pricing with a net average selling price of $5.39 per gram.

Adjusted EBITDA

Adjusted EBITDA was down year-over-year from $(3.3) million in Q2 2019 to $(10.4) million in Q2 2020 and quarter-over-quarter from $(4.9 million) in Q1 2020. Lower average selling prices and higher impairment charges related to inventory write-downs resulted in decreased margins. Adjusted EBITDA was also impacted by a quarter-over-quarter increase in operating expenses.

Capital Expenditure

Capital expenditures in the quarter were $11.9 million, primarily reflecting the completion of construction at the 7ACRES Facility, the addition of an ethanol extraction lab at the Blissco Facility and phase 1 retrofitting to the Kitchener Facility. With the completion of these construction projects, capital expenditure for the remainder of fiscal 2020 is expected to be minimal, consisting of additional CPG equipment and minor retrofitting to the 7ACRES Facility where supported by near-term cash flow returns.

Balance Sheet and Liquidity

In the quarter, Supreme Cannabis entered into a credit agreement with Bank of Montreal as Lead Arranger and Agent on behalf of a group of lenders for $90.0 million of senior secured credit facilities (the Credit Facility), consisting of a term loan of $70.0 million and a revolving credit facility of $20.0 million. The Company initially drew $55.0 million of the term loan under the Credit Facility, ending the quarter with a total cash and restricted cash balance of $55.0 million and $35.0 million of undrawn capacity.

During Q2 2020, the Company completed its standard evaluation of investments which resulted in a reduction in the carrying value of MG Health Lesotho. This reduction is reflective of general cannabis market conditions and recognized as a loss in Other Comprehensive Income.

Operations

Prior to calendar year end, on December 21, 2019, all major construction on the Company’s 440,000 square foot premium cultivation facility (the “7ACRES Facility”) was completed. Since completing construction and optimizing new equipment, Supreme Cannabis has realized greater operational efficiencies, improving its throughput trimming rate by 400% and increasing its packaging capacity by 200%. Subsequent to quarter end, 7ACRES brought a second automated bottling line into production, increasing total packaging capacity to a maximum of 24,000 containers per day. The Company expects that 7ACRES will bring a third automated bottling line into production prior to fiscal year-end.

The 7ACRES Facility has approximately 250,000 square feet of licensed cultivation space, comprised of 21 flowering rooms and four rooms dedicated to vegetation and propagation. With major construction complete, the Company has put in submissions for licenses to Health Canada and expects to bring an additional 20,000 square feet of flowering space and 10,000 square feet of vegetation and propagation space online in Q3 2020. An additional room that previously operated as a storage and support space is currently undergoing minor retrofits to be converted back into a flowering room. The remaining 25th flowering room is operating as 7ACRES’ processing and packaging space. Once necessary processing and packaging capacity is brought online at the Company’s facility in Kitchener, Ontario, the company intends to convert this room back into a cultivation space.

As previously announced, Supreme Cannabis leased an 107,000 square foot building in Kitchener, Ontario to serve as a central manufacturing, processing and packaging centre for Supreme Cannabis brands (the “Kitchener Facility”). The Company has completed the first phase of construction on the Kitchener Facility, which includes a retrofitted multi-purpose processing clean room. The Company has submitted its application to Health Canada for a cannabis processing license. This license will allow Supreme Cannabis to conduct product packaging and value-added processing at the Kitchener Facility. In Q4 FY2020, the Company expects to begin whole flower packaging and pre-roll manufacturing for Supreme Cannabis brands at the Kitchener Facility.

In Q2 2020, Supreme Cannabis completed construction on Blissco’s 12,000 square foot extraction facility inLangley, British Columbia(the “Blissco Facility”), adding a large-scale ethanol-based extraction lab that expands on Blissco’s existing CO2-based extraction capability. In the quarter, Blissco received itsCannabis Oil Sales Licensefrom Health Canada as well as a license amendment that allows for the sale of cannabis 2.0 products. Aspreviously announced, with this license amendment and the capacity to produce over 7,000,000 tincture bottles annually, Blissco’s state-of-the-art extraction facility will process product for 7ACRES’ vaporizerpartnershipwithPax Labs, Inc.(“PAX”).

Products and Brands

At the end of Q2 2020, Supreme Cannabis launched Sugarleaf pre-rolls, the Company’s first offering priced below the premium category. Sugarleaf is currently available in Alberta, Ontario and Quebec, and will increase distribution in fiscal 2020. Sugarleaf will launch an additional pre-roll strain in Q3 2020 and enter more product categories prior to fiscal year end. The company will use Blissco’s oil extraction and formulation expertise to introduce an additional oil under the mainstream Sugarleaf brand. This builds on Supreme Cannabis’ position in the CBD oil category, with Blissco’s full spectrum CBD oil, Pr Dew, addressing the premium end of the category.

Through the Sugarleaf brand, the Company has seen strong demand for pre-roll products and intends to bring whole flower pre-rolls to market under the 7ACRES brand in Q3 2020. By the end of Q3 2020, 7ACRES will also introduce its first 2.0 cannabis product in the form of PAX pods for the PAX Era vaporizer. 7ACRES inputs will be extracted at the Blissco facility and Blissco’s experienced team will formulate premium oils for the 7ACRES PAX Era pods. Prior to fiscal year end, the Company expects to introduce additional 2.0 products under the 7ACRES brand in the form of concentrates.

Supreme Cannabis continues to achieve capital light international exposure in the EU and UK through its Truverra branded CBD products. Truverra’s e-commerce model, includes distribution on Amazon UK and on truverra.com. Supreme Cannabis is gathering valuable market insights through Truverra’s consumer website. Subsequent to quarter end Supreme Cannabis launched a new Truverra website, improving the consumer journey and shopping experience. Supreme Cannabis will continue to address international medical opportunities under this international brand.

Outlook

Due to current market conditions, including a slower than anticipated retail rollout nationally, Supreme Cannabis is withdrawing its previously issued financial outlook for fiscal 2020, which was originally announced on September 17, 2019 and subsequently confirmed on November 14, 2019. This decision is discussed in further detail under the heading “Outlook” in the Company’s MD&A for the second quarter ended December 31, 2019.

The Company is confident in its ability to grow near-term revenue and reach profitability based on its accelerated transition to a premium Cannabis CPG company, its improved operating structure and its expected offering of new high-quality brands and products at every price segment. The Company provides the following updated outlook for the remainder of the fiscal year:

  • Efficient and effective coast-to-coast sales coverage with the humble+fume sales partnership. The partnership will allow for brand building at a store level, thereby enhancing distribution, brand advocacy and budtender education.
  • Launch of 2.0 products including PAX era vaporizer pods and cannabis concentrate products.
  • Expanded brand portfolio with the launch of recreational brands that address the ultra-premium and value segments.
  • 7ACRES to complete its transition from a wholesale business to premium consumer brand by Q3 2020, with completed in-house packaging capabilities for all flower products under the 7ACRES’ brand. Supreme Cannabis will continue to opportunistically supplement recreational sales with attractive wholesale transactions.
  • Engaged an internationally recognized search firm that is identifying and evaluating candidates for the position of CEO.
  • Fully funded to execute on all planned initiatives.

Supreme Cannabis’ MD&A and consolidated financial statements for the second quarter ended December 31, 2019, along with all previous public filings of The Supreme Cannabis Company, Inc., may be found on SEDAR at www.SEDAR.com.

All figures are in Canadian dollars.

About Supreme Cannabis

The Supreme Cannabis Company, Inc., (TSX: FIRE) (OTCQX: SPRWF) (FRA: 53S1), is a global diversified portfolio of distinct cannabis companies, products and brands. Since 2014, the Company has emerged as one of the world’s fastest-growing, premium plant-driven lifestyle companies. Supreme Cannabis’ portfolio of brands caters to diverse consumer experiences, with brands and products that address recreational, wellness, medicinal and new consumer preferences.

The Company’s brand portfolio includes, 7ACRES, Blissco, Truverra, Sugarleaf by 7AC and Khalifa Kush Enterprises Canada. Supreme Cannabis’ brands are backed by a focused suite of world-class operating assets that serve key functions in the value chain, including, scaled cultivation, value-add processing, centralized manufacturing and product testing and R&D. Follow the Company on Instagram, Twitter, Facebook, LinkedIn and YouTube.

We simply grow better.

Original press release

February 12, 2020
 

A Detailed Look at Cannabis Sales in California, Oregon, Arizona, Colorado, Nevada and Maryland

We are pleased to share with our readers overviews on five important Western cannabis markets as well as Maryland compiled by BDS Analytics for the month of December. BDS Analytics offers a full understanding of the evolving cannabis market though several offerings, including its GreenEdge Retail Sales Tracking, Consumer Insights, Industry Intelligence and CBD Market Monitor divisions. For those not familiar with the Colorado-based company, which was founded in 2015 and is run by co-founders CEO Roy Bingham and President Liz Stahura, we have been covering their progress since almost day 1.

During December, the fourth month following the onset of the vaping crisis, sales across the six markets totaled $607.6 million, up 3.2% from November due to recovery in the vaping category. Overall sales growth from a year ago among the five Western markets ranged from 5% in California to as high as 38% in Arizona. Concentrates, which represented 23-33% of sales by market (compared to 23-32% in November, 22-32% in October, 23-33% in September and 26-38% in August), grew more rapidly compared to November within each market than overall sales grew due to increased sales of vape pens. Growth in concentrates from a month ago ranged from 4-13% in all of the markets, while flower sales were essentially flat in December. The most rapid growth among the Western markets was 9% in Oregon, where flower expanded by 5%. Colorado and Nevada experienced 4% sequential growth in concentrates despite flower sales declining in those markets from the prior month. In Maryland, the difference was even more stark, with concentrates expanding 13% while flower grew 3% from the prior month.

Here is a closer look at each market, as detailed by BDS Analytics:

Arizona

Sales for Arizonas medical dispensaries were $70.3 million this past December, a four percent increase from November. Compared to December 2018, sales increased nearly 38 percent. Total sales for calendar year 2019 were $721.4 million, a $132.8 million increase from 2018.

In December, Flower sales reached $35.6 million, accounting for nearly 51 percent of overall revenues for the month. Flower sales increased by two percent from the trailing month and 57 percent from the year prior. The year-end tally for flower sales was $349.3 million, a 28 percent increase from 2018.

Pre-Rolled Joints remain a small category in Arizonas medical-only market. Sales of Pre-Rolled Joints were $2.5 million in December and reached $24.4 million for all 2019. Compared to 2018, sales in December increased 27 percent. The 2019 year-end tally was a 13 percent increase for 2018.

The Concentrates product category accounted for 32 percent towards overall revenues in December. The $22.8 million in Concentrates sales represented 23 percent growth compared to December 2018. In 2019, Concentrates sales increased 18 percent, totaling $248.7 million for the full year. Concentrates sales are segmented into Dabbable and Vape products. Compared to December 2018, sales increased 25 and 22 percent for the two categories, respectively.

Sales of Ingestibles generated $8.1 million in sales in December 2019 and contributed 11 percent towards total revenues for the month. Compared to December 2018, sales increased 24 percent. For the calendar year 2019, the $84 million sold in Ingestibles was 24 percent greater than 2018. The Ingestibles category includes both Edibles and Sublinguals. Edibles sales contributed 90 percent towards Ingestibles revenues in December and sales increased over 29 percent compared to December 2018. Sales of Sublinguals in December 2019 have decreased by eight percent compared to December 2018.

California

This past December, sales for Californias licensed dispensaries and delivery services reached a combined $251.7 million, increasing four percent from November. Year-over-year sales for the month of December show an increase of five percent, and the total 2019 sales of nearly $3 billion indicate 18 percent growth compared to 2018.

In December, Flower contributed over 35 percent towards overall revenues with $88.2 million in sales. Compared to November, sales in the category increased by one percent; compared to December 2018, sales increased 10 percent. in all of 2019, sales of Flower totaled over $1 billion, a 10 percent increase compared to 2018 yearly revenue. Contributing almost 11 percent towards overall revenue in California, Pre-Rolled Joints sales generated $27.6 million this past December, a 48 percent increase compared to December of 2018.

Sales of Concentrates contributed about 33 percent of revenues for the month. The $82.2 million in Concentrates sales represented an increase of five percent from the trailing month and a six percent decrease compared to December 2018. In 2019, Concentrates dollar sales increased by more than 22 percent compared to 2018, totaling more than $1 billion for the year.

Despite a health and safety scare earlier in the year, vape sales continue to dominate the Concentrates category each month and December of 2019 was no exception. Vape products made up over 80 percent of dollar sales within the Concentrates category and more than 26 percent of overall sales revenue across the entire market. In 2019, Vape sales in California alone have totaled $851.2 million, increasing 28 percent compared to 2018 revenue.

Sales of Ingestibles reached $44.4 million this past December, contributing 18 percent towards overall revenues. Compared to December 2018, sales in the category increased by seven percent. The $506.6 million in ingestibles sales for calendar year 2019 represented 24 percent growth from 2018. The Ingestibles category includes both Edibles and Sublinguals, while also distinguishing the two subcategories. Compared to December of 2018, revenues from Edibles increased by 13 percent while Sublinguals decreased by 15 percent.

Colorado

Sales from Colorados adult-use and medical dispensaries reached a combined $146.8 million this past December, a three percent increase from November. Compared to December 2018, sales increased by more than seven percent.In the calendar year 2019, sales in the Centennial state totaled at an impressive $1.8 billion in 2019, a 13 percent increase from 2018.

In December, Flower contributed 42 percent towards all revenues with $61.7 million in sales. The category experienced a 14 percent increase in sales compared to December 2018, and a three percent decrease compared to the trailing month.In 2019,sales of Flowerincreased by nearly 10 percent from 2018.In December, Pre-Rolled Joints sales generated over $10 million,a 31 percent increase compared to December of 2018. At the end of 2019, sales in the pre-rolled joint category reached $106.9 million, a 22 percent increase from 2018.

Concentrates remain the second largest category by revenue. In December, sales of Concentrates contributed over 31 percent towards overall revenues with $46.1 million in sales.For the calendar year 2019, sales of Concentrates have grown by more than 16 percent, totaling $581.9 million.Despite the vape scare that negatively impacted vape sales starting in late August, the category managed to finish the year with a 34 percent increase over 2018.

Ingestibles reside as the third largest product category. In December, sales of Ingestibles were $24.7 million, a seven percent increase compared to December 2018. The $281.6 million generated in total 2019 sales represents a 15 percent increase compared to 2018. The Ingestibles category includes the subcategories of Edibles and Sublinguals. Yearly total sales revenue from Edibles grew by 14 percent compared to 2018, while the smaller Sublinguals segment grew by 19 percent compared to the year prior.

Maryland

In December 2019, cannabis sales in Marylands medical dispensaries reached $27.5 million, a seven percent increase from November. The 2019 calendar year ended with total sales of $252.2 million. Maryland remains a medical only market for now, but sales are growing as new dispensaries open and more patients are registered.

In December, Flower sales reached $13.7 million, accounting for nearly 50 percent of overall revenues for the month. Flower sales increased by three percent from the trailing month. Sales of flower reached $126.4 million in total revenue for the calendar year 2019.

Pre-Rolled Joints remain a small category in Marylands medical-only market. Sales of Pre-Rolled Joints were $2.3 million in December and reached $17.3 million in total revenue for 2019. Compared to November 2019, sales for the month increased by nine percent. In the most recent reporting period, the category contributed more than eight percent towards overall revenues for the month.

Concentrate sales accounted for more than 28 percent of overall December revenues, totaling $7.8 million. Compared to the trailing month, sales of concentrates grew by 13 percent, and category sales totaled $77.4 million in 2019. Concentrates sales are segmented into Dabbable and Vape products. Compared to November 2019, sales increased six and 16 percent for the two categories, respectively.

The Ingestibles category continues to grow as a result of favorable regulation enacted earlier in the year. Sales of Ingestibles generated $3.1 million in sales in December 2019 and contributed over 11 percent towards total revenues for the month. The ingestibles category totaled $23.8 million in 2019. The Ingestibles category includes both Edibles and Sublinguals. Edibles sales contributed 88 percent towards Ingestibles revenues in December and sales increased by 13 percent compared to the trailing month. Sales of Sublinguals in December 2019 have increased 14 percent compared to November 2019.

Nevada

Combined sales for Nevadas medical and recreational dispensaries totaled at $58 million this past December, a one percent increase from November. Compared to December 2018, sales increased by 12 percent overall. Total revenues for calendar year 2019 were $691.5 million, a 19 percent increase from 2018.

Flower sales reached $25.2 million in December 2019, contributing 43 percent towards overall sales revenue. Flower sales decreased about one percent from the trailing month and have increased by 17 percent compared to December 2018. For calendar year 2019, the $291.9 million in flower sales were a 20 percent increase from the prior year.

The $8.9 million generated from Pre-Rolled Joints in December 2019 contributed 15 percent towards overall revenues for the month. Nevada is the leading state for the proportion of sales derived from pre-rolls. Compared to December 2018, sales increased by 23 percent. In 2019, pre-rolled joints generated $99.4 million.

Concentrates contributed more than 23 percent towards total revenues in December. The $13.5 million in sales represented a four percent increase from the trailing month. In 2019, Concentrates sales increased 28 percent compared to 2018, totaling $173.6 million for the year.

Sales of Ingestibles generated $8.6 million in sales for the month of December and contributed 15 percent towards monthly revenues. Year-over-year sales in December increased 11 percent. In calendar year 2019, the $102.5 million in Ingestibles sales was 12 percent greater than 2018 sales. The Ingestibles category includes both the Edibles and Sublinguals subcategories. Edibles contributed 87 percent towards Ingestibles revenues in December, while Sublinguals contributed the remaining 13 percent. In 2019, sales of Edibles increased 11 percent; Sublinguals sales increased by 22 percent over 2018.

Oregon

Oregon dispensary sales reached $72.8 million this past December, a seven percent increase from November. Compared to December 2018, overall sales increased by 27 percent. The end of year results for all 2019, sales increased by 21 percent compared to 2018, reaching more than $810 million in total annual sales.

Flower sales reached $32.3 million in December 2019, accounting for 44 percent of overall revenues. Flower sales increased by five percent compared to from the trailing month; but jumped by 49 percent compared to December 2018. In 2019, Flower sales increased 24 percent compared to 2018, totaling $341.3 million in 2019. The $6.5 million generated from Pre-Rolled Joints in December 2019 contributed nine percent towards overall revenues for the month. Compared to December 2018, sales increased by 57 percent.

Sales within the Concentrates category contributed nearly 27 percent towards revenues in December. The $19.3 million in Concentrates sales represent seven percent growth from December 2018. In 2019, Concentrates sales have increased 22 percent over the same period in 2018, totaling $235.3 million for the year. Compared to December 2018, sales increased 49 percent and decreased by almost 12 percent for the two subcategories, respectively.

Sales of Ingestibles generated $11.8 million in December and contributed over 16 percent towards revenues for the month. Year-over-year sales in December increased by 15 percent. In 2019, the $131 million in Ingestibles sales represented 20 percent growth compared to 2018.

For readers looking for a deeper look at cannabis markets across these five states and more, including segmentation by additional product categories, brand and item detail, longer history, and segmentation by product attributes, learn how the BDS AnalyticsGreenEdge Platformcan provide you with unlimited access to the most accurate and actionable data and analysis.

February 12, 2020
 
Big marijuana companies in the United States increasingly are turning to debt as a funding tool, spurred by falling cannabis stock prices and terms that are more attractive than those for real estate sale-leaseback deals
February 11, 2020
 
Medical cannabis dispensaries in Louisiana could have a new MMJ product source as soon as March or April with Southern University poised to begin harvesting its first crop next week
February 11, 2020
 

Visit The Supreme Cannabis Company Investor Dashboard and stay up to date with data-driven, fact based due diligence for active traders and investors.

Supreme Cannabis Focuses Organization and Reduces Cost Structure to Accelerate Profitable Growth
  • Corporate positions decreased by approximately 33% and operational positions decreased by approximately 13%
  • Total number of positions decreased by approximately 15% across the Company
  • New structure focuses the business on accelerating revenue growth in the Canadian market

TORONTO, Feb. 11, 2020 /PRNewswire/ – The Supreme Cannabis Company, Inc. (“Supreme Cannabis” or the “Company”) (TSX: FIRE) (OTCQX: SPRWF) (FRA: 53S1) today announced the implementation of a new operating structure, including staff reductions, to drive efficiencies and support long-term, profitable growth.

As previously announced on January 6, 2020, Supreme Cannabis’ board and management team are focused on achieving greater efficiencies and speed to market by rightsizing production, overhead and capital expenditures. At a corporate, operational and international level, the Company’s management team is focusing its businesses and implementing new operating models that prioritize near-term revenue growth in the Canadian market.

As Interim President and CEO, I committed to take immediate steps to position Supreme Cannabis for long-term success, including rightsizing the Company’s cost structure and focusing our efforts on near-term revenue-generating opportunities. Recent staff reductions were an extremely difficult decision for myself and the Board, but I believe them to be necessary to create a more agile, focused and profitable organization for the long-term benefit of all of Supreme Cannabis’ stakeholders.

Colin Moore, Director and Interim President and CEO

The changes we are implementing will empower our people, drive value for our shareholders and ensure that we continue to deliver a consistent and premium product to our consumers.

Under the new optimized organization, reporting structures at the corporate level are being streamlined and vendor contracts and support services have been rationalized. Focusing the Company on near-term revenue generating opportunities and creating a more nimble and effective corporate structure resulted in a 33% reduction in employee headcount at a corporate level. In addition to ongoing improvements to the Company’s operational efficiencies, Supreme Cannabis has begun implementing a flatter organizational structure and cost-saving measures across its operating assets, including a reduction in the number of positions at the operational level of approximately 13%. Across the Company, the total number of positions have decreased by approximately 15%.

As part of management’s enhanced focus on domestic operations and prioritizing near-term profitability, the Company exited its investment in Supreme Heights, its UK and European cannabis investment platform, by exercising its retractable rights to return all investments back to the Company. Supreme Cannabis will continue to achieve capital-light, international exposure to the global wellness and medical markets through its Truverra business and MG Health Lesotho investment.

As previously announced, the Company will provide its second quarter financial results for the three and six months ended December 31, 2019, as well as an update on its plan for accelerated revenue growth and strategy to support its transition into a premium cannabis CPG company, after markets close on February 13, 2020.

About Supreme Cannabis.

The Supreme Cannabis Company, Inc., (TSX: FIRE) (OTCQX: SPRWF) (FRA: 53S1), is a global diversified portfolio of distinct cannabis companies, products and brands. Since 2014, the Company has emerged as one of the world’s fastest-growing, premium plant-driven lifestyle companies. Supreme Cannabis’ portfolio of brands caters to diverse consumer experiences, with brands and products that address recreational, wellness, medicinal and new consumer preferences.

The Company’s brand portfolio includes, 7ACRES, Blissco, Truverra, Sugarleaf by 7AC and Khalifa Kush Enterprises Canada. Supreme Cannabis’ brands are backed by a focused suite of world-class operating assets that serve key functions in the value chain, including, scaled cultivation, value-add processing, centralized manufacturing and product testing and R&D. Follow the Company on Instagram, Twitter, Facebook, LinkedIn and YouTube.

We simply grow better.

Original press release

February 11, 2020
 

Collaboration to Include Bespoke Vape Products and Partnership on Vaporization Regulatory and Compliance Legislation

CAMBRIDGE, Mass., Feb. 11, 2020 (GLOBE NEWSWIRE) — TILT Holdings Inc. (TILT or the Company) (CSE: TILT) (OTCQB: TLLTF), a foundational technology cannabis platform comprised of assets to support brands worldwide, announced today that its subsidiary Jupiter Research, LLC (Jupiter), has partnered with The Blinc Group, LLC (“Blinc”) to offer bespoke vaporization devices to its clients as well as collaborate on industry innovations, cannabis vaping regulatory and compliance issues.

Jupiter has always taken pride in being at the forefront of innovation.As the market continues to grow we are excited to announce our partnership with The Blinc Group, enabling bespoke solutions for our clients and leveraging their expertise when it comes to vaporization regulatory and legal compliance legislation.

Mark Scatterday, interim CEO at TILT and Founder/CEO of Jupiter

Blincs Co-Founder and CEO Arnaud Dumas de Rauly is the Chairman of the International ISO committee on Vaping Standards, Chairman of the European CEN Committee on Vapor Products, former President of FIVAPE in the EU, and a renowned expert in inhalation technology, regulations, manufacturing and distribution.

We look forward to working closely with Jupiter and bringing additional value and expertise to their extensive network of clients.I am excited to see what the future of cannabis vaping landscape holds when two companies like Jupiter and Blinc work closely together to help shape the new standards and set an example for regulatory compliance as a whole.

Arnaud Dumas de Rauly,Blincs Co-Founder and CEO

In addition to working on bespoke products together for key clients, Jupiter plans to leverage Blinc’s extensive quality control, regulatory and compliance expertise to remain at the forefront of vaporization legislation, ensuring safe and compliant consumption across the United States and internationally.

In January, the Centers for Disease Control and Prevention ended its ‘state of emergency’ general public advisory against vaping, due to the sharp decline in e-cigarette, or vaping, product use-associated lung injury cases being reported. The focus and scope of efforts to address the unregulated businesses and unlicensed storefronts is still an important factor in maintaining safety in the industry. The Blinc and Jupiter partnership represents an opportunity to accelerate and foster industry innovation and collaboration beyond vaporization.

About TILT

TILT Holdings serves cannabis brands worldwide through a strong network of portfolio companies committed to technological innovations that support long-term success. TILT services more than 2,000 brands and cannabis retailers across 33 states in the U.S., as well as in Canada, Israel, Mexico, South America and the European Union. As a market leader in cannabis technology and related products and services, the Companys core assets include wholly-owned subsidiaries Jupiter, a company that focuses on the vast potential of inhalation through innovative design, development and manufacturing; Blackbird Holdings Corp., a company that provides operations and software solutions for wholesale and retail distribution; and Baker Technologies Inc., a CRM platform helping dispensaries grow their business. The Company also owns cannabis operations in states including Massachusetts, led by Commonwealth Alternative Care, Inc.; and in Pennsylvania, led by Standard Farms, LLC. Headquartered in Cambridge, Massachusetts, with offices throughout the U.S., and London, TILT has over 400 employees and has sales in the U.S., Canada and Europe. For more information, visit www.tiltholdings.com.

About Blinc

The Blinc Group provides best-in-class proprietary cannabis vaping solutions for leading MSOs and LPs in the United States, Canada and Europe. With quality, safety, and innovation serving as Blincs foundational pillars, the companys key value proposition offers the most comprehensive suite of services for full-stack product development and deployment. As product quality, safety and brand differentiation become more critical than ever, Blinc focuses on control of the entire value chain from R&D to product design, to compliance and manufacturing at ISO and cGMP certified facilities with oversight by Blincs China based QA/QC team. The Blinc Group raises the bar on cannabis vaping standards, ensuring a future-proof growth path for its clients and absolute safety for their consumers. For more information, visit www.theblincgroup.com

Contact Information:
Joel Milton
SVP of Business Development
Phone: (303) 872-7255

Original Press Release

February 11, 2020
 

EDMONTON,Feb. 11, 2020/CNW/ – Fire & Flower Holdings Corp. (“Fire & Flower” or the “Company”), today announced amendments to its 8.0% unsecured convertible debentures due onJuly 31, 2020(the “Debentures”).

Fire & Flower has forced the conversion of debentures to eliminate the interest payments associated with such debentures and the removal of these liabilities from the Company’s balance sheet further strengthens Fire & Flower’s financial position.

With the consent of the two holders of the Debentures, the provisions of the amended and restated debenture indenture datedFebruary 13, 2019, as supplemented, have been amended to provide for the forced conversion of the principal amount of Debentures by the Company at its sole discretion in the event the common shares of the Company (the “Common Shares”) have a closing trading price of not less than$0.70.

Concurrently with the amendments, the Company has delivered a notice to force the conversion of all remaining principal amount of Debentures and accrued and unpaid interest thereon. In connection with the conversion of the principal amount of Debentures, the Company expects to issue an aggregate of approximately 12,173,912 Common Shares, subject to adjustment to reflect the number of Common Shares issued in respect of the accrued and unpaid interest on the Debentures.

Fire & Flower is laser focused on its goals for 2020, including a strong balance sheet that positions the Company for growth in a challenging capital market for cannabis companies. The forced conversion of the Debentures removes this debt from the Company’s balance sheet and limits the ongoing interest payments associated with the Debentures.

Trevor Fencott, Fire & Flower’s Chief Executive Officer

About Fire & Flower

Fire & Flower is a leading purpose-built, independent adult-usecannabis retailer poised to capture significant Canadian market share. The Company guides consumers through the complex world of cannabis through education-focused, best-in-class retailing while the Hifyre digital platform connects consumers with cannabis products. The Company’s leadership team combines extensive experience in the cannabis industry with strong capabilities in retail operations.

Fire & Flower Holdings Corp. owns all issued and outstanding shares in Fire & Flower Inc., a licensed cannabis retailer that owns or has interest in cannabis retail store licences in the provinces ofAlberta,Saskatchewan,ManitobaandOntarioand theYukonterritory.

Through its strategic investment with Alimentation Couche-Tard Inc. (ATD.A, ATD.B), the Company has set its sights on the global expansion as new cannabis markets emerge.

Original press release

February 10, 2020
 
Troy Dayton of Arcview joins CNBC's "Power Lunch" team to talk about cannabis stocks and what investors should know.
February 10, 2020
 

Although Ohio legalized medical use of cannabis four years ago, the state has been slow to grow its program. Myriad regulations, along with delays in awarding licenses, kept the program from becoming fully functional until January 2019, when the states first licensed medical cannabis dispensary opened.

Although adult-use of cannabis is legal in nearby states such as Michigan and Illinois, Ohio Gov. Mike DeWine has made it clear that he is not interested in taking the next step toward legalization. Ohio lawmakers have yet to file legislation, and no steps have been taken toward putting legalization on the ballot for 2020. That may be, in part, due to the fact that those who want to purchase it need only cross state lines to do so. In this review, we take a look at the history of Ohios cannabis program, the existing marketplace and potential for future growth.

History

On Sept. 8, 2016, then-Gov. John Kasich signed House Bill 523 into law, legalizing medical marijuana in Ohio. The law mandated that a medical marijuana program be established within two years, but red tape delayed sales of medical cannabis until the beginning of last year. Pent up demand led to thousands waiting in long lines on the first day of sales, according to published news reports.

The law allows use for 21 conditions from AIDS to Ulcerative Colitis. The states medical board, which is responsible for adding qualifying conditions, last year rejected petitions to add anxiety and autism spectrum disorders to the list.

Although Ohio law prohibits patients from smoking cannabis, flower can be sold for use in a vaporizer. The law does not allow patients to grow their own cannabis. It allows patients to purchase a 90-day supply at a time in the following amounts:

  • Up to 8 ounces of Tier 1 medical cannabis, which contains up to a maximum 23% concentration of THC
  • Up to 5.3 ounces of Tier 2 medical cannabis, which refers to anything with a THC concentration of 23%, but not more than 35%
  • Patches, lotions, creams and other topical forms of medical cannabis with no more than 26.55 grams of THC
  • Up to 9.9 grams of THC from cannabis oil, tinctures, capsules and other edible forms
  • Up to 53.1 grams of THC in oil for vaporization

A small percentage of Ohios 11.7 million residents (0.7%) are medical cannabis users. As of Dec. 31, 2019, 83,857 patients had recommendations for use by a physician, with 78,376 patients registered. Another 8,259 caregivers also were registered. There are 590 physicians who are certified to recommend medical cannabis. The latest figures can be found here.

As of the end of January 2020, an estimated 7,869 pounds of plant material was sold along with 372,071 units of manufactured product. There has been an estimated $65.6 million in product sales cumulatively. Historical sales data can be found here.

There are two types of cultivator licenses based on the size of the grow operation. Level I cultivators can operate an area up to 25,000 square feet; Level II cultivators can grow in an area of up to 3,000 square feet.

Seventeen cultivators have received Level I provisional licenses, of which 10 have received certificates of operation. Thirteen received Level II provisional licenses, of which 10 have received certificates of operation. You can view thecomplete list of Ohio’s licensed cannabis cultivators.

Level I cultivators with certificates to operate include some large multi-state cannabis companies such as Columbia Care, (NEO: CCHW) (OTC: CCHWF) (FSE: 3LP) and Cresco Labs (CSE: CL) (OTC: CRLBF) Another big player, PharmaCanns license is pending.

Terradiol Ohio LLC, another Level I cultivator with a pending license, has ties to TILT Holdings (CSE: TILT) (OTCQB: TLLTF). The state tried to revoke its large-scale cultivation license because of a dispute, but the company was able to overcome its issues and was given until the end of this year to obtain a certificate of operation, according to news reports. Ohio Grown Therapies (OGT), which has a pending license, is in the process of being acquired by Curaleaf Holdings Inc. (CSE: CURA) (OTC: CURLF).

Dispensaries

The law calls for no more than 60 dispensary licenses to be awarded, and they may not be any less than 500 feet from a school, church, public library, public playground or public park. So far there are 49 active licenses. The state offersan interactive mapfor all licensed Ohio dispensary locations, depicted below, and it also offers a spreadsheet, accessible from that page, with data that includes the name, address, phone number, license number, designated representative and date of licensing.

Several large multi-state cannabis companies have licenses to open dispensaries. Among them are:

  • Green Thumb Industries (CSE: GTII) (OTC: GTBIF), a leading national cannabis consumer packaged goods company and owner of Rise which has four locations in Ohio.
  • Verilife, whose parent company is PharmaCann, has one location in Cincinnati.
  • Greenleaf Apothecaries, LLC has five The Botanist dispensaries. Greenleaf licenses The Botanist brand from Acreage Holdings (CSE: ACRG) (OTC: ACRGF). Greenleaf had planned to sell its Ohio operations to Acreage, but Ohios pharmacy board opened an investigation into the arrangement and determined that the arrangement violated state regulations. Greenleaf settled and was barred from selling any of its dispensaries there for 18 months.
  • Cresco Labshas a single location, CY+ Dispensary.
  • Have A Heart, a privately-held operator based in Washington, has a single location.

Other operators with more than one dispensary include Bloom Medicinals (5), Pure Ohio Wellness (2), Strawberry Fields (4) and Verdant Creations (5).

Bloom Medicinals dispensary located in Columbus

Processors and Testing

Ohio issued 43 provisional licenses to processors, 16 of which have received certificates of operation. The complete list of Ohio medical cannabis processorscan be found here. Included among them is Ohio Medical Solutions, an affiliate of Vireo Health International Inc. (CNSX: VREO, OTC: VREOF).

Five provisional licenses were issued for testing, three of which have received certificates of operation. They can be found here.

On a side note, Innovative Industrial Properties Inc. (NYSE: IIPR), a cannabis REIT, has been cutting leaseback deals with some cannabis companies doing business in Ohio. On Feb. 3, IIP announced it closed on a sale-leaseback deal with Green Thumb Industries for its pending processing facility in Toledo. This was its second deal with GTI, which also sold it a processing facility in Pennsylvania. On Jan. 29, Innovative announced it had purchased a facility in Ohio from Cresco Labs for around $10.5 million, with an additional investment of up to $1.9 million, to lease it back to the grower.

Future Growth

Unlike other states, where its been full steam ahead for the cannabis industry, Ohio has taken a slow-and-steady approach. Its bumpy start in getting the program off the ground, limits on medical use and high prices caused by a lack of product availability at the onset of the program add up to a market that saw about $60 million in sales, about half of which came in the last quarter of 2019.

As more cultivators come online, more dispensaries open and more medical conditions are approved for cannabis use, Ohio’s medical cannabis program should grow. Meantime, while surrounding states Michigan and Illinois have legalized adult-use cannabis, Ohio is not expected to follow suit right away. The governor has indicated he is not in favor of it and there are no immediate plans for legislation this year. Talk of putting the question to voters on a ballot likely would not come in 2020 either.

February 10, 2020
 

TORONTO, Feb. 10, 2020 (GLOBE NEWSWIRE) —MPX International Corporation(MPX International,”MPXI or the Company) (CSE:MPXI;OTC:MPXOF) announced the opening of its inaugural Holyweed CBD retail flagship store in the heart of Genevas tourist district. The store is strategically located on one of Genevas busiest streets, Rue des Eaux-Vives, near the famed water fountain Jet dEau, Genevas largest tourist attraction.

The location carries all Holyweed Swiss Certified Organic branded products as well as products from several other premium CBD brands curated by Holyweed. Holyweed products include: 100% Swiss grown cannabis light/high CBD dry flowers, pre-rolls, oil tinctures, Cannabricot a Swiss-made apricot cannabis liquor and eau-de-vie, a cannabis tea. Holyweed is currently the only Swiss CBD brand that has been awarded the official Swiss Certified Organic label, a distinction that aligns the Holyweed brand with Switzerlands impeccable reputation for high quality consumer products.

Photos of Holyweed accompanying this announcement are available at

https://www.globenewswire.com/NewsRoom/AttachmentNg/0c1c63e1-cf72-4dce-9cce-a9a057f46fe6

https://www.globenewswire.com/NewsRoom/AttachmentNg/6cc3ede2-6fc2-4c7e-af6c-1d5590da53f7

This first Holyweed store in Geneva is another step in our European retail strategy to cement MPXI as trailblazers providing access to premium quality CBD products in Europe and beyond. Importantly, it also further underpins our assertion that Switzerland is our most immediate opportunity for revenue generation, second only to our already revenue generating Canadian operations.

W. Scott Boyes, Chairman, President and CEO of MPXI

The opening of this first retail location is on the heels of our very successful harvest of approximately 90,000 kilograms of Swiss-organic, high CBD biomass in the fall and continues to build on the strong momentum we are experiencing in this jurisdiction.

Again, we are creating first mover advantages that positions MPXI for success as a global leader and will enable us to capture market share as the European CBD market continues to experience massive growth, Mr. Boyes added. Our growing traction in Switzerland strongly supports this.

This new retail location builds on the Companys burgeoning European retail presence. In November 2019, MPXI opened its first retail beleaf branded CBD retail location in Londons Soho district.

Enhancing the cultural zeitgeist, Holyweed has collaborated with famed photographer Henrik Purienne to create an exclusive art book calledWandering And Learning, distributed through exclusive concept stores and trend setting retail partners globally in order to further build Holyweed brand awareness, not only in Switzerland but globally.

A photo ofWandering And Learningaccompanying this announcement is available athttps://www.globenewswire.com/NewsRoom/AttachmentNg/d8c26f68-968f-43bf-9a4c-4912e68b3f0a

In January 2020, Holyweed sponsored a major cultural event in Switzerland with its official sponsorship of Art Geneve, one of Europes most successful contemporary art fairs.

Select forays such as these demonstrates Holyweed leading management expertise to build a global cannabis brand in order to further elevate and extend our brand recognition with discerning consumers, said Daniel Fryer, Managing Director, Europe. Those actions cement Holyweeds position as the premium Swiss brand of organic certified CBD products within the immediate region and throughout Europe.

Later in 2020, MPXI expects to open a second Holyweed retail location in Zurich, which is Switzerlands largest city.

About Holyweed:

18 Rue des Eaux-Vives
Geneva

Hours of operation:

Mon-Fri 9:00 a.m. 7:00 p.m.

Sat 9:00 a.m. 6:00 p.m.

Sun Closed

About MPX International Corporation

MPX International Corporation is focused on developing and operating assets across the global cannabis industry with an emphasis on cultivating, manufacturing and marketing products which include cannabinoids as their primary active ingredient.About MPX International Corporation

Original Press Release

February 09, 2020
 

You’re reading a copy of this week’s edition of the free New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015.

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Friends,

This week’s news in Canada highlights the near-term operating challenges licensed producers face, with both Aurora Cannabis and Tilray revealing reductions in their workforce, continuing a trend across the country. While the operating environment is likely to improve as more stores open and the new products roll out, capital to fund operating losses has dried up. Consequently, companies like Aurora and Tilray, as well as many others, are moving to cut costs in order to achieve profitability.

The Aurora news, of course, was much more extensive, and it revealed a massive write-down ahead totaling as much as C$1 billion, including up to C$775 million in goodwill and up to C$225 million in intangibles and property, plant and equipment. This latter part is related to the ICC Labs acquisition in South America and the Denmark development project.

Goodwill, for those readers not familiar with the term, is the difference between the purchase price and the value of the assets purchased during an acquisition. While many tend to disregard goodwill when evaluating the asset value of a company, a write-down of this type of asset can impact a company with debt. In the case of Aurora, it renegotiated its covenants, so it’s not an issue at this time. Heavy M&A activity followed by a stock decline is a precursor to the write-down of goodwill as assumptions are revisited. In our view, it’s a sign of a failed acquisition strategy. In the case of Aurora, to its credit, the acquisitions were paid with stock rather than cash.

Investors should expect more asset impairments in Canada, in our view, perhaps as early as this week when Canopy Growth reports. The company had goodwill and intangibles on the balance sheet in excess of C$2.4 billion at 9/30. The company also has over C$1.6 billion in property, plant and equipment, some of which could be written down as well. We note that Aurora Cannabis had over C$3.8 billion in intangibles and goodwill, and it’s likely that any potential write-downs at Canopy would be less than the write-downs at Aurora Cannabis.

While some of the other global LPs could also face write-downs of assets, we think the large American operators have much less risk, though many have substantial goodwill. The reason for a more optimistic view is that the large MSOs are at or close to profitability, which suggests less likelihood of goodwill impairment or the impairment of any property, plant and equipment.

The asset impairments by Aurora Cannabis and potentially other LPs may weigh on sentiment in the near-term, but they are a lagging indicator of the financial condition rather than being predictive.


Join NRGene for a Free Webinar on Feb 12th 1pm ET
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New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:


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Sincerely,

Alan & Joel

February 08, 2020
 
Auroras Terry Booth exits the company, a big-name celebrity leaves the namesake medical marijuana retailer she co-founded, a New Mexico court allows MMJ business tax deductions -and more of the weeks top cannabis business news
February 07, 2020
 
Arkansas medical marijuana dispensaries sold $10 million in the first six weeks of the year, a faster-sales pace than anticipated, shows state data released on Friday
February 07, 2020
 
The coronavirus outbreak in China is expected to impact marijuana vaporizer companies that depend on Chinese suppliers by interfering with the flow of hardware and other products
February 07, 2020
 
The Marijuana Industry Group, Colorados oldest cannabis trade association, appointed a former owner of MJ stores in Denver as its new executive director
February 07, 2020
 
Acreage Announces Comprehensive Financing Transactions

NEW YORK, Feb. 07, 2020 (GLOBE NEWSWIRE) — Acreage Holdings, Inc. (Acreage or Company) (CSE: ACRG.U) (OTCQX: ACRGF) (FSE: 0VZ), one of the largest vertically integrated cannabis operators in the U.S., today announced it entered into agreements in respect of the following financing transactions (collectively, the Financing Transactions):

  • US$100,000,000 credit facility (the Credit Facility) with an institutional lender (the Institutional Lender), with US$49,000,000 available to be drawn down at First Closing (as defined below)
  • US$50,000,000 private loan transaction to provide cash collateral for the Credit Facility (the Loan Transaction)
  • US$30,000,000 private placement of special warrants (the Private Placement) and an option to acquire a further US$20,000,000 of special warrants (the Option)

Benefits of the Financing Transactions:

  • Capital Needs – Satisfies the near-term capital requirements of Acreage and its subsidiaries and creates a path for further borrowings pursuant to the Credit Facility up to $100 million in aggregate
    • Closing of the Private Placement and the first tranche of the Credit Facility will provide access to gross proceeds of approximately $79 million
    • Availability of further $50 million under Credit Facility (and total additional availability of $70 million if the Option is exercised)
  • Non-Dilutive to Canopy Transaction – the consideration per share to be received by Acreage shareholders upon completion of the previously approved plan of arrangement with Canopy Growth is not impacted by the Financing Transactions
  • Financial Position – the Financing Transactions significantly improve Acreages financial position to continue to execute on its vision while establishing paths for further additional non-dilutive and shareholder-friendly financing transactions

In a time of limited capital availability for our industry, I am excited to announce these proposed transactions to strengthen our balance sheet, further enabling us to execute our plan to be a leading consumer cannabis company in the U.S.

Kevin Murphy, Chairman and CEO of Acreage

In the course of these transactions, we have cemented a relationship with a well-capitalized institutional lender that has the capacity to provide additional credit facilities as necessary.

ADDITIONAL TRANSACTION DETAILS

Credit Facility

A subsidiary of Acreage (the Borrower) may draw down up to US$100,000,000 from the Institutional Lender under the Credit Facility in three tranches, with the first advance, of US$49,000,000, expected to be received in February 2020, subject to satisfaction of the closing conditions including closing of the Loan Transaction (First Closing).

Interest under the Credit Facility advances will be payable monthly as follows: (a) for the first year, 2.55% per annum on the first advance, 1.25% per annum on the second advance, and a rate to be negotiated for the third advance; and (b) for the second year, a rate to be negotiated. Advances made pursuant to the Credit Facility will be secured by a guarantee from the IP Borrower (as defined below) and security over the US$50,000,000 of the proceeds from the Loan Transaction (the Cash Collateral). The Borrower may drawdown on the remaining US$51,000,000 of the Credit Facility if such additional advances are secured by cash collateral equal to the additional amounts borrowed plus US$1,000,000. The Institutional Lender will not have security in any of Acreages or its subsidiaries other property or assets. The Credit Facility has a two-year term and matures, subject to acceleration in certain limited instances, on the date that is two years from First Closing.

Acreage expects to use the advances for working capital and general corporate purposes.

Loan Transaction

In order to fund the Cash Collateral, an Acreage subsidiary (the IP Borrower) will borrow US$50,000,000 in the aggregate (the Borrowed Amount) from IP Investment Company, LLC (the Lender). Kevin Murphy, Acreages Chief Executive Officer, is lending US$21,0000,000 of the Borrowed Amount to the Lender in connection with the completion of the Lenders loan to the IP Borrower. Acreage has been advised that Mr. Murphy will not be a member, an officer nor a director of the Lender and that Mr. Murphy will be entitled to receive, assuming full repayment of the Borrowed Amount at maturity, US$23,100,000 along with up to 304,001 Interest Shares (as defined below). The maturity date for borrowings under the Loan Transaction, subject to acceleration in certain instances, will be 366 days from the closing date of the Loan Transaction.

Monthly interest under the Loan Transaction will be satisfied by the IP Borrower delivering to the Lender 83,333 Acreage Class A subordinate voting shares (Subordinate Voting Shares) per month, or 1,000,000 Subordinate Voting Shares in the aggregate (the Interest Shares). Acreage is required to use commercially reasonable efforts to ensure that the Interest Shares are not subject to resale restrictions.

The Lender will be granted a security interest in the non-U.S. intellectual property owned by Acreage and its affiliates (the IP Security). If the IP Borrower has not repaid the principal amount outstanding at maturity along with an additional repayment amount, being an aggregate of US$55,000,000, the Lender shall have the right to enforce its IP Security and sell such collateral to a third party in satisfaction of the IP Borrowers obligations to the Lender. In the event that the sale of the IP Security does not take place, the Lender may require Acreage to issue up to 20,000,000 Subordinate Voting Shares, with all net proceeds of the offering payable to the Lender in satisfaction of the repayment amount owing to it. If the Lender does not receive at least US$55,000,000 from the net proceeds of such offering and Acreage does not make a cash payment in respect of any shortfall, certain subsidiaries of Acreage will be required to dispose of assets (Secured Assets) in transactions to make up the difference between US$55,000,000 and the net proceeds from such offering.

If, prior to the date that is four months from the closing of the Credit Facility, Acreage or its affiliates has not (a) borrowed or otherwise raised debt or equity capital from any person of at least an additional US$65,000,000, or (b) repaid US$20,000,000 of the principal amount of the Borrowed Amount by (i) paying US$22,000,000 to the Lender and concurrently delivering to the Lender that number of Interest Shares equal to 48% of the Interest Shares that have yet to be delivered to the Lender, the Lender shall have the right to accelerate the maturity of US$20,000,000 of the principal amount of the Borrowed Amount. If this acceleration occurs, (a) certain Secured Assets will be transferred to the Lender in satisfaction of the maturing amount, and (b) a number of Interest Shares equal to 48% of the Interest Shares that have yet to be delivered to the Lender shall be immediately delivered by the IP Borrower. If the Secured Assets cannot be transferred for regulatory reasons, Acreage and/or its applicable subsidiaries will make arrangements to provide the economic benefits thereof to the Lender.

The Lender shall have the right to put any Interest Shares that it still owns upon maturity of the Loan Transaction to the IP Borrower at a put price of US$4.50 per Interest Share for a period of 10 business days following the maturity date.

Closing of the Loan Transaction is expected to occur in February, 2020 and is subject to execution of definitive transaction documents, required consent and approval, closing of the Private Placement, approval of the Canadian Securities Exchange (CSE) and customary closing conditions.

The participation of Kevin Murphy in the Loan Transaction constitutes a related party transaction within the meaning of Multilateral Instrument 61101 Protection of Minority Security Holders in Special Transactions (MI 61101). The Company has relied on exemptions from the formal valuation and minority shareholder approval requirements of MI 61101 contained in sections 5.5(a) and 5.7(1)(a) of MI 61101 in respect of related party participation in the placement as neither the fair market value (as determined under MI 61-101) of the subject matter of, nor the fair market value of the consideration for, the transaction, insofar as it involved the related parties (being Mr. Murphy), exceeded 25% of the Companys market capitalization (as determined under MI 61-101). Further details will be included in a material change report to be filed by the Company. The material change report will not be filed more than 21 days prior to closing of the Loan Transaction due to the timing of the announcement of the Loan Transaction and the anticipated closing thereof occurring in less than 21 days.

Private Placement

Acreage also announced today the Private Placement of US$30,000,000 of special warrants (“Special Warrants”) at a price of US$4.93 (the Issue Price) per Special Warrant. The Special Warrants shall be automatically exercised (without payment of any further consideration) into units of the Company (the Units) on the earliest to occur of: (i) the date that is three business days following the date on which the Company files a prospectus supplement (the Qualification Prospectus Supplement) to the Companys base shelf prospectus dated August 8, 2019 (the Base Shelf Prospectus) with the applicable securities regulatory authorities in the Province of Ontario and each of the jurisdictions in Canada in which the Special Warrants are sold (collectively, the Securities Commissions) qualifying the distribution of the Units issuable upon exercise of the Special Warrants, and (ii) the date that is four months and one day after the Closing Date (as hereinafter defined) (the Automatic Conversion Date), subject to adjustment in certain events.

Each Unit will consist of one Subordinate Voting Share and one Subordinate Voting Share purchase warrant of the Company (a Warrant). Each Warrant will be exercisable to acquire one subordinate voting share of the Company (a Warrant Share) for a period of five years following the Closing Date (as hereinafter defined) of the Private Placement at an exercise price of US$5.80 per Warrant Share, subject to adjustment in certain events.

At the closing of the Private Placement, the lead subscriber will be granted the Option to purchase, at the Issue Price per Special Warrant, up to US$20,000,000 of additional Special Warrants or, if the Qualification Prospectus Supplement has been filed prior to the time of exercise, Units, exercisable at the lead subscribers option at any time up until 8:00 a.m. (Eastern time) on March 16, 2020. The Qualification Prospectus Supplement shall also qualify the distribution of the Units issuable upon exercise of such additional Special Warrants (if the Option is exercised prior to filing the Qualification Prospectus Supplement) or issuable upon exercise of the Option (if the Option has not been exercised prior to the filing of the Qualification Prospectus Supplement).

The net proceeds from the Private Placement will be used for working capital and general corporate purposes.

Canaccord Genuity Corp. is acting as bookrunner and lead agent (the Agent) on a fully marketed, best efforts private placement basis.

The Special Warrants shall be offered and sold by private placement to accredited investors within the meaning of National Instrument 45-106 – Prospectus Exemptions and other exempt purchasers only in those provinces of Canada in which a receipt (or deemed receipt) has been issued for the Base Shelf Prospectus by the applicable securities regulatory authority.

The Special Warrants and the Warrants will not be listed on any stock exchange. The Company intends to apply to list the Subordinate Voting Shares and the Warrant Shares on the CSE.

The Special Warrants issued pursuant to the Private Placement will be subject to a statutory four month and one day hold period following the Closing Date subject to the earlier clearing of the Qualification Prospectus Supplement qualifying the distribution of the Units issuable upon exercise of the Special Warrants.

Closing of the Private Placement is expected to occur on or about February 7, 2020 (the Closing Date). Closing of the Private Placement is subject to customary closing conditions, including, without limitation, receipt of all regulatory approvals.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities in the United States. The Special Warrants being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended (the U.S. Securities Act) or the securities laws of any state of the United States and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the U.S. Securities Act) absent registration or an applicable exemption from the registration requirements. This news release will not constitute an offer to sell or the solicitation of an offer to buy nor will there be any sale of the securities in any state of the United States in which such offer, solicitation or sale would be unlawful.

ABOUT ACREAGE

Headquartered in New York City, Acreage is one of the largest vertically integrated, multi-state operators of cannabis licenses and assets in the U.S., according to publicly available information. Acreage owns licenses to operate or has management or consulting services or other agreements in place with license holders to assist in operations in 20 states (including pending acquisitions) with a population of approximately 180 million Americans, and an estimated 2022 total addressable market of US$16.7 billion in legal cannabis sales, according to Arcview Market Research. Acreage is dedicated to building and scaling operations to create a seamless, consumer-focused branded cannabis experience. Acreage debuted its national retail store brand, The Botanist, in 2018 and its award-winning consumer brands, The Botanist and Live Resin Project in 2019.

On June 27, 2019 Acreage implemented an arrangement under section 288 of the Business Corporations Act (British Columbia) (the Arrangement) with Canopy Growth. Pursuant to the Arrangement, the Acreage articles were amended to provide Canopy Growth with an option to acquire all of the issued and outstanding shares in the capital of Acreage, with a requirement to do so, upon a change in federal laws in the United States to permit the general cultivation, distribution and possession of marijuana (as defined in the relevant legislation) or to remove the regulation of such activities from the federal laws of the United States (the Triggering Event), subject to the satisfaction of the conditions set out in the arrangement agreement entered into between Acreage and Canopy Growth on April 18, 2019, as amended on May 15, 2019 (the Arrangement Agreement). Acreage will continue to operate as a stand-alone entity and to conduct its business independently, subject to compliance with certain covenants contained in the Arrangement Agreement. Upon the occurrence or waiver of the Triggering Event, Canopy Growth will exercise the option and, subject to the satisfaction or waiver of certain conditions to closing set out in the Arrangement Agreement, acquire (the Acquisition) each of the Subordinate Voting Shares (following the automatic conversion of the Class B proportionate voting shares and Class C multiple voting shares of Acreage into Subordinate Voting Shares) in exchange for the payment of 0.5818 of a common share of Canopy Growth per Subordinate Voting Share (subject to adjustment in accordance with the terms of the Arrangement Agreement). If the Acquisition is completed, Canopy Growth will acquire all of the Acreage Shares, Acreage will become a wholly owned subsidiary of Canopy Growth and Canopy Growth will continue the operations of Canopy Growth and Acreage on a combined basis. For more information about the Arrangement and the Acquisition please see the respective information circulars of each of Acreage and Canopy Growth dated May 17, 2019, which are available on Canopy Growths and Acreages respective profiles on SEDAR at www.sedar.com. For additional information regarding Canopy Growth, please see Canopy Growths profile on SEDAR at www.sedar.com.

Original press release

February 07, 2020
 

CHICAGO, February 7, 2020–(BUSINESS WIRE)–Cresco Labs(CSE:CL) (OTCQX:CRLBF) (Cresco Labs or the Company), one of the largest vertically integrated multistate cannabis operators in the United States, today announced that it has closed thepreviously announcedacquisition of Hope Heal Health, Inc. (HHH) after receiving regulatory approval for change in ownership granted by the Massachusetts Cannabis Control Commission (CCC). HHH holds licenses for cultivation, product manufacturing, and retail operations in Massachusetts, with the ability to obtain up to two more retail licenses in the state. HHH currently operates a cultivation and manufacturing facility in Fall River, Massachusetts, adjacent to its Fall River Dispensary.

The close of Crescos acquisition coincides with the launch of recreational cannabis sales at the HHH dispensary. The license enables the Company to continue serving its existing medical-use customer base and begin serving the fast-growing adult-use market through the retail and wholesale distribution of Crescos house of brands. Massachusetts recorded nearly $450 million in the first year of cannabis sales, according to the CCC.

Cresco Labs CEO and Co-founder Charlie Bachtell, commented, In our pursuit of achieving the most strategic geographic footprint in the U.S., we are thrilled to begin serving adult-use customers and continue serving medical patients in Massachusetts. Since we originally entered an agreement to acquire HHH in late 2018, weve worked with HHH to build a reputation of quality and consistency in what is now the largest adult-use market in the Northeast.

Now that weve officially closed the acquisition, were stepping into a fully operational, vertically integrated business that is immediately accretive with both positive EBITDA and cash flow.

Charlie Bachtell, Cresco Labs CEO and Co-founder

We look forward to building out our retail presence under the Sunnyside* brand (pending approval), as well as our wholesale channel and growing our market share as weve done successfully in other states.

There are more than 40 adult-use dispensaries in the Massachusetts market that the Company may now begin distributing its full suite of products to, including Cresco, Remedi, and Mindys Edibles. The Fall River dispensary is located less than 20 miles from downtown Providence, RI directly off an Interstate exit and the Company expects adult-use sales to reflect a strong customer base both in the local community and with the Massachusetts tourism market.

About Cresco Labs

Cresco Labs is one of the largest vertically-integrated multi-state cannabis operators in the United States. Cresco is built to become the most important company in the cannabis industry by combining the most strategic geographic footprint with one of the leading distribution platforms in North America. Employing a consumer-packaged goods (CPG) approach to cannabis, Crescos house of brands is designed to meet the needs of all consumer segments and includes some of the most recognized and trusted national brands including Cresco, Remedi and Mindys, a line of edibles created by James Beard Award-winning chef Mindy Segal. Sunnyside*, Crescos national dispensary brand, is a wellness-focused retailer designed to build trust, education and convenience for both existing and new cannabis consumers. Recognizing that the cannabis industry is poised to become one of the leading job creators in the country, Cresco has launched the industrys first national comprehensive Social Equity and Educational Development (SEED) initiative designed to ensure that all members of society have the skills, knowledge and opportunity to work in and own businesses in the cannabis industry. Learn more about Cresco Labs atwww.crescolabs.com.

Original press release

February 06, 2020
 

Friedmann and Detlefsen Bring Significant Experience in Consumer Products and Marketing

EDMONTON, Feb. 6, 2020 /PRNewswire/ – Aurora Cannabis Inc. (the “Company” or “Aurora”) (NYSE | TSX: ACB), the Canadian company defining the future of cannabis worldwide, today appointed two new independent directors, Lance Friedmann and Michael Detlefsen (together the “New Directors”). The New Directors term begins immediately.

We are pleased to welcome Lance Friedmann and Michael Detlefsen as independent members to the board at this critical time in our transformation.

Executive Chairman and Interim CEO Michael Singer

We expect to see cannabinoids grow as a category in consumer products and believe their depth of experience and strong track records of successful brand development and operational business transformation will provide helpful insights to our executive team. With the addition of Messrs. Friedmann and Detlefsen, Aurora has expanded its Board, independent directors.

About Lance Friedmann

Over Mr. Friedmann’s 25 year experience with Kraft Foods and Mondelz International, Inc. he held a number of roles of progressing scope and responsibility focused on marketing, strategy, and customer insights across the U.S., Latin America, and Asia. His experience includes senior management of Kraft Foods’ marketing-related and corporate marketing programs, for Canada, Mexico and Puerto Rico, and Health & Wellness. Notably, he played a critical role in the launch of the “Sensible Solutions” product line, and subsequently led Mondelez’s $12 billion global biscuits category, including Oreo, the world’s #1 biscuit brand.

About Michael Detlefsen

Mr. Detlefsen is currently the Managing Director of Pomegranate Capital Advisors, an active investor advisory firm with holdings in the branded consumer and B2B food sectors, agribusiness and financial services. He brings over 30 years as a senior executive and investor in the global consumer products, agri-food, logistics and transportation, and telecom sectors. He has a strong track record of developing and executing strategies to accelerate growth, transform operations, improve capital allocation and substantially enhance corporate performance. Mr. Detlefsen currently serves on the boards of SunOpta (NASDAQ: STKL) and Phoenix Canada Oil Company (TSX:PCO), and is the Executive Chair of Elevation Brands, a privately-held consumer products company focused on gluten-free and allergen-friendly foods. He is also a Governor of the Royal Ontario Museum, Canada’s largest museum of natural history and world cultures. Mr. Detlefsen previously served on the boards of State Street and Multi-Marques in Canada and CWC Communications PLC in the UK.

CEO Retirement and Succession & Business Transformation Plan

Aurora also announced today in a separate announcement a CEO Retirement and Succession & Business Transformation Plan to better align fixed costs and capital expenditures with current market conditions. These combined changes will significantly accelerate Aurora’s path to cash flow break even while still maintaining the Company’s ability to capitalize on the long-term, global cannabinoids market opportunity. Aurora will host a conference call today at 5:00 p.m. Eastern Time to discuss these business updates.

CEO Succession & Business Transformation Plan Conference Call

DATE: Today,Thursday, February 6, 2020

TIME:5:00 p.m. Eastern Time|3:00 p.m. Mountain Time

WEBCAST:http://public.viavid.com/index.php?id=138052

REPLAY: (844)-512-2921 or (412)-317-6671

PIN NUMBER: 13698974

Available until11:59 p.m. Eastern Time Thursday, February 20, 2020

About Aurora

Headquartered in Edmonton, Alberta, Canada with sales and operations in 25 countries across five continents, Aurora is one of the world’s largest and leading cannabis companies. Aurora is vertically integrated and horizontally diversified across every key segment of the value chain, from facility engineering and design to cannabis breeding and genetics research, cannabis and hemp production, derivatives, high value-add product development, home cultivation, wholesale and retail distribution.

Highly differentiated from its peers, Aurora has established a uniquely advanced, consistent and efficient production strategy, based on purpose-built facilities that integrate leading-edge technologies across all processes, defined by extensive automation and customization, resulting in the massive scale production of high-quality consistent product. Designed to be replicable and scalable globally, our production facilities are designed to produce cannabis at significant scale, with high quality, industry-leading yields, and low-per gram production costs. Each of Aurora’s facilities is built to meet European Union Good Manufacturing Practices (“EU GMP”) standards. Certification has been granted to Aurora’s first production facility in Mountain View County, the MedReleaf Markham facility, and its wholly owned European medical cannabis distributor Aurora Deutschland. All Aurora facilities are designed and built to the EU GMP standard.

In addition to the Company’s rapid organic growth and strong execution on strategic M&A, which to date includes 17 wholly owned subsidiary companies MedReleaf, CanvasRX, Peloton Pharmaceutical, Aurora Deutschland, H2 Biopharma, BC Northern Lights, Larssen Greenhouses, CanniMed Therapeutics, Anandia, HotHouse Consulting, MED Colombia, Agropro, Borela, ICC Labs, Whistler, Chemi Pharmaceutical, and Hempco Aurora is distinguished by its reputation as a partner and employer of choice in the global cannabis sector, having invested in and established strategic partnerships with a range of leading innovators, including: Radient Technologies Inc. (TSXV: RTI), Cann Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings Inc. (CSE: CHOO), CTT Pharmaceuticals (OTCC: CTTH), Alcanna Inc. (TSX: CLIQ), High Tide Inc. (CSE: HITI), EnWave Corporation (TSXV: ENW), Capcium Inc. (private), Evio Beauty Group (private), and Wagner Dimas (private).

Aurora’s Common Shares trade on the TSX and NYSE under the symbol “ACB”, and is a constituent of the S&P/TSX Composite Index.

Original press release

February 06, 2020
 

Visit the Aurora Cannabis Investor Dashboard and stay up to date with data-driven, fact based due diligence for active traders and investors.

Aurora Cannabis Announces CEO Retirement and Succession, Board of Directors Expansion, and Business Transformation Plan

Releases Preliminary Results for the Second Fiscal Quarter Ended December 31, 2019

  • Aurora Cannabis Founder & CEO, Terry Booth, announces retirement and succession plan and expansion of the Board of Directors
  • Executive Chairman Michael Singer has been appointed Interim CEO, effective immediately; search for permanent successor underway
  • Two new Independent Directors to join the Board for a total of 10 directors, including 7 Independents
  • Announces comprehensive transformation plan to significantly reduce the Company’s expense base, rationalize capital expenditures, and better align its balance sheet with current market conditions
  • Secures credit facility amendments that remove EBITDA ratio covenants and provide additional financial flexibility as Aurora executes transformation plan
  • Company provides select unaudited preliminary fiscal Q2 2020 financial results and updated outlook
  • Aurora to host Conference Call at 5:00 p.m. Eastern Time

EDMONTON, Feb. 6, 2020 /PRNewswire/ – Aurora Cannabis Inc. (the “Company” or “Aurora”) (NYSE | TSX: ACB), the Canadian company defining the future of cannabis worldwide, today announced a CEO succession and Board expansion; the latter of which is detailed in a separate announcement released this afternoon. The Company also announced a business transformation plan that better aligns selling, general & administrative expenses, and capital expenditures with current market conditions.

These combined changes are consistent with, and evidence of Aurora’s commitment to, achieving positive EBITDA and cash flow as rapidly as possible, while still maintaining the ability to capitalize on longer-term Canadian and global cannabis market opportunities.

CEO Succession

Aurora CEO Terry Booth stated, “Over the last seven years, Aurora has built an incredible platform and a leading position in the global Cannabis industry. I am proud and humbled to have led that journey with a deeply talented and passionate team of employees. While there is still much work to be done, the timing is right to announce my retirement with a thoughtful succession plan in place and the immediate expansion of the Board of Directors. These changes, along with the financial transformation which we are undertaking, should clearly demonstrate to investors that Aurora has the continuity, strategic direction and leadership it needs to transition from its entrepreneurial roots to an established organization well positioned to capitalize on a global growth opportunity. In that spirit, and with my full support, the Board of Directors has appointed Michael Singer as Interim CEO effective immediately.”

As part of the succession plan, I will become a Senior Strategic Advisor to the Board and remain a Director. Additionally, we’re welcoming new independent members; Lance Friedmann and Michael Detlefsen who bring a wealth of strategic and hands-on consumer products industry experience to the organization.

Aurora CEO Terry Booth

Michael Singer, Aurora’s Executive Chairman and Interim CEO stated, “I look forward to serving as Interim CEO and executing on our short-term plans, which include a rationalization of our cost structure, reduced capital spending, and a more conservative and targeted approach to capital deployment. These are necessary steps that reflect a fundamental change in how we will operate the business going forward.” Singer continued, “On behalf of the Board of Directors, I want to thank Terry for his leadership over the years. He’s made an indelible mark on the industry and left an enviable legacy in the form of Aurora Cannabis and the potential that exists for the Company over the coming decades.”

As one of the original cannabis visionaries, Terry is an invaluable resource with deep industry knowledge that we can leverage strategically. I look forward to having him continue on as a Senior Strategic Advisor to our Board of Directors.

Michael Singer, Aurora’s Executive Chairman and Interim CEO

Financial Transformation & Capital Position

Management today announced sweeping changes intended to rationalize the cost structure and balance sheet going forward. The Company believes this will better align the business financially with the current realities of the cannabis market in Canada while maintaining a sustainable platform for long-term growth.

These actions are expected to include significant and immediate decreases in selling, general & administrative (“SG&A”) expenses and capital investment plans.

Selling, General & Administrative Expenses

It is the Company’s intention to manage the business to an SG&A range of $40 million to $45 million per quarter by the end of the fiscal fourth quarter of 2020, a significant decrease from the preliminary fiscal second quarter 2020 range announced today. To do this, management plans to focus the business on its core areas: 1) Canadian consumer market; 2) Canadian medical market; 3) established international medical markets; and 4) U.S. market initiatives. Severance and other one-time charges related to SG&A reductions are expected to range from $2 million to $4 million and will be largely incurred in the Company’s fiscal second and third quarters ending December 31, 2019 and March 31, 2020 respectively.

As part of the changes to operations, the Company has eliminated close to 500 full-time equivalent staff across the company, including approximately 25% of corporate positions. Additionally, management is restructuring spending plans on information technology projects, sales and marketing initiatives, travel & entertainment, professional services, and other non-revenue generating third-party costs which do not provide an immediate impact on revenue.

Capital Expenditures

Aurora announced its intention to reduce capital expenditures for the second half of fiscal 2020 to bring capital expenditures below $100 million in total. Over the past several weeks, Aurora management has undertaken a detailed evaluation of all capital projects underway and made decisions with respect to continuing or terminating further investment in each. Future capital allocation decisions will be scrutinized first and foremost through a lens of optimizing near-term investor returns.

Balance Sheet & Liquidity

Aurora has also announced a number of amendments to its secured credit facilities which are designed to better align the Company’s balance sheet and cash flow expectations with current market conditions and to provide financial flexibility over the near term. These amendments include:

  • Complete removal of all EBITDA ratio covenants, originally set to commence in the period ending September 30, 2020
  • Complete removal of fixed charge coverage ratio covenant
  • Adjustment of the total funded debt-to-equity covenant to 0.20:1 commencing in fiscal third quarter 2020, from 0.25:1 currently
  • Reduction of the total facility size available by $141.5 million
  • Introduction of a new minimum liquidity covenant of $35 million
  • The introduction of a covenant requiring Aurora to achieve positive EBITDA thresholds beginning in fiscal Q1 2021 that The Company believes are consistent with today’s announced changes

We are pleased to have reached an agreement with our syndicate of banks to provide Aurora with additional financial flexibility aligned with our focus on achieving near-term profitability and providing the Company with options to refinance the facility at maturity. I would like to thank our banking partners for their continued support of Aurora.

Glen Ibbott, Aurora’s CFO

Aurora announced that, given market current cannabis market conditions and the slower than expected near-term industry growth, it has undertaken a thorough review of all business operations and concluded that certain assets and goodwill values as at December 31, 2019 exceed current fair-market valuations. As such, when Aurora formally reports its fiscal second quarter 2020 results, it expects to report asset impairment charges on certain intangible and property, plant and equipment in a range of $190 million to $225 million and write-downs of goodwill in the range of $740 million to $775 million. Following these non-cash charges, Aurora expects to remain compliant with its revised total debt-to-equity covenant going forward.

Glen Ibbott continued, “The assets being impaired are predominantly associated with our operations in South America and Denmark, as our estimate of the timeline for substantial growth extends in those markets. Our core Canadian cannabis assets are not impacted by these non-cash asset impairment charges.” Ibbott concluded, “We believe that the long-term opportunity for Aurora remains very compelling, despite a slower than anticipated rate of industry growth in the near-term. We also believe our approach to rationalizing the business and conservatively improving our balance sheet positions Aurora in a more stable position for sustainable growth going forward.”

Aurora announced that its consolidated cash position was $156 million, excluding $45 million of restricted cash as at December 31, 2019. This includes gross proceeds raised under its US$400 million At-the-Market (“ATM”) financing program of approximately US$245 million (or approximately $325 million) to date in fiscal 2020. As of today, the Company has remaining capacity under its current ATM program of approximately $200 million. With the cost reduction and business transformation initiatives announced today, the Company expects that utilization of the ATM capacity will be sufficient to fund operations and remaining required capital expenditures, to the points where positive EBITDA and free cash flow are achieved.

Unaudited Preliminary Fiscal 2020 Second Quarter Financial Results

Aurora today provided unaudited preliminary second quarter fiscal 2020 financial results. The Company expects cannabis revenues for the second quarter of fiscal 2020 of $62 million to $66 million, net of excise taxes. Aurora expects to record provisions for returns, price reductions and future provisions of approximately $12 million, almost all of which relates to product sold in previous quarters. Therefore, net cannabis revenues, after giving effect to these offsets, are expected to be $50 million to $54 million. These revenue expectations reflect consistent quarter-over-quarter medical revenues, a decrease in international revenues due to short-term German supply interruptions, and much lower bulk sales. For the second quarter, Aurora expects to report modest quarter-over-quarter growth in consumer cannabis revenues prior to applying these offsetting return and price reduction allowances.

Cash cost to produce per gram of dried cannabis sold() is expected to remain below $1.00, sales and marketing expenses are expected to be between $28 million to $32 million and general and administrative expenses are expected to be between $70 million to $75 million.

The outlook for cannabis revenue for Aurora’s fiscal third quarter is expected to be impacted by the general industry headwinds mentioned above, and as such will likely show little to no growth relative to fiscal Q2’s cannabis revenue of $62 million to $66 million, prior to the provisions for returns and price reductions.

Aurora will announce its full second quarter fiscal 2020 financial results on February 13, 2020.

Aurora will host a conference call today at 5:00pm Eastern Time to discuss these updates.

CEO Succession & Business Transformation Plan Conference Call

DATE: Today, Thursday, February 6, 2020

TIME: 5:00 p.m. Eastern Time | 3:00 p.m. Mountain Time

WEBCAST: http://public.viavid.com/index.php?id=138052

REPLAY: (844)-512-2921 or (412)-317-6671

PIN NUMBER: 13698974

Available until 11:59 p.m. Eastern Time Thursday, February 20, 2020

(1)Cash cost to produce per gram of dried cannabis sold is a non-GAAP financial measure and is not recognized, defined, or subject to standardized measurement under IFRS. Aurora defines and reconciles the calculation to IFRS in the Company’s interim MD&A. Cash cost to produce per gram of dried cannabis sold is calculated by taking the IFRS cost of sales, excluding the effect of changes in the FV of biological assets and inventory, and deducting depreciation, cannabis extract conversion costs, cost of accessories, cost of products purchased from other Licensed Producers that were sold, cost of sales from non-cannabis producing subsidiaries, and post-production costs. Cash cost to produce per gram of dried cannabis sold is calculated by taking cash cost to produce of dried cannabis sold divided by total grams of dried cannabis sold in the period that were produced by Aurora. Management believes these measures provide useful information about the efficiency of production and fulfillment for our core cannabis operations

About Aurora

Headquartered in Edmonton, Alberta, Canada with sales and operations in 25 countries across five continents, Aurora is one of the world’s largest and leading cannabis companies. Aurora is vertically integrated and horizontally diversified across every key segment of the value chain, from facility engineering and design to cannabis breeding and genetics research, cannabis and hemp production, derivatives, high value-add product development, home cultivation, wholesale and retail distribution.

Highly differentiated from its peers, Aurora has established a uniquely advanced, consistent and efficient production strategy, based on purpose-built facilities that integrate leading-edge technologies across all processes, defined by extensive automation and customization, resulting in the massive scale production of high-quality consistent product. Designed to be replicable and scalable globally, our production facilities are designed to produce cannabis at significant scale, with high quality, industry-leading yields, and low-per gram production costs. Each of Aurora’s facilities is built to meet European Union Good Manufacturing Practices (“EU GMP”) standards. Certification has been granted to Aurora’s first production facility in Mountain View County, the MedReleaf Markham facility, and its wholly owned European medical cannabis distributor Aurora Deutschland. All Aurora facilities are designed and built to the EU GMP standard.

In addition to the Company’s rapid organic growth and strong execution on strategic M&A, which to date includes 17 wholly owned subsidiary companies MedReleaf, CanvasRX, Peloton Pharmaceutical, Aurora Deutschland, H2 Biopharma, BC Northern Lights, Larssen Greenhouses, CanniMed Therapeutics, Anandia, HotHouse Consulting, MED Colombia, Agropro, Borela, ICC Labs, Whistler, Chemi Pharmaceutical, and Hempco Aurora is distinguished by its reputation as a partner and employer of choice in the global cannabis sector, having invested in and established strategic partnerships with a range of leading innovators, including: Radient Technologies Inc. (TSXV: RTI), Cann Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings Inc. (CSE: CHOO), CTT Pharmaceuticals (OTCC: CTTH), Alcanna Inc. (TSX: CLIQ), High Tide Inc. (CSE: HITI), EnWave Corporation (TSXV: ENW), Capcium Inc. (private), and Evio Beauty Group (private).

Aurora’s Common Shares trade on the TSX and NYSE under the symbol “ACB”, and is a constituent of the S&P/TSX Composite Index.

Original press release

February 06, 2020
 

Visit the KushCo Holdings Investor Dashboard and stay up to date with data-driven, fact based due diligence for active traders and investors.

KushCo Holdings, Inc. Prices $16 Million Registered Direct Offering

CYPRESS, CA / ACCESSWIRE / February 6, 2020 / KushCo Holdings, Inc. (OTCQX:KSHB) (“KushCo” or the “Company”), today announced it has entered into definitive agreements with investors for the purchase and sale of 10,000,000 units, with each unit consisting of one share of common stock, par value $0.001 per share, and a warrant to purchase half a share of common stock, at an offering price of $1.60 per unit, pursuant to a registered direct offering. The warrants will have an exercise price of $2.00 per share, will be immediately exercisable and will expire five years from the date of issuance. The gross proceeds of the offering will be approximately $16 million before deducting placement agent fees and other estimated offering expenses. The Company intends to use the net proceeds for working capital and for other general corporate purposes. The closing of the registered direct offering is expected to take place on or about February 10, 2020, subject to the satisfaction of customary closing conditions.

A.G.P./Alliance Global Partners is acting as sole placement agent for the offering.

This offering is being made pursuant to an effective shelf registration statement on Form S-3 (File No. 333-231019) previously filed with the U.S. Securities and Exchange Commission (the “SEC”). A prospectus supplement describing the terms of the proposed offering will be filed with the SEC and will be available on the SEC’s website located at http://www.sec.gov. Electronic copies of the prospectus supplement may be obtained, when available, from A.G.P./Alliance Global Partners, 590 Madison Avenue, 36th Floor, New York, NY 10022, or by telephone at (212) 624-2060, or by email at prospectus@allianceg.com. Before investing in this offering, interested parties should read in their entirety the prospectus supplement and the accompanying prospectus and the other documents that the Company has filed with the SEC that are incorporated by reference in such prospectus supplement and the accompanying prospectus, which provide more information about the Company and such offering.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About KushCo Holdings

KushCo Holdings, Inc. (OTCQX: KSHB) (www.kushco.com) is the premier producer of ancillary products and services to the legal cannabis and CBD industries. KushCo Holdings’ subsidiaries and brands provide product quality, exceptional customer service, compliance knowledge and a local presence in serving its diverse customer base.

Founded in 2010, KushCo Holdings has now sold more than 1 billion units to growers, processors and producers across North America, South America, and Europe.

The Company has been featured in media nationwide, including CNBC, Fox News, Yahoo Finance, Cheddar, Los Angeles Times, TheStreet.com, and Entrepreneur, Inc Magazine. While KushCo Holdings provides products and solutions to customers in the cannabis and CBD industries, it has no direct involvement with the cannabis plant or any products that contain THC.

For more information, visit www.kushco.com or call (888) 920-5874.

Original Press Release

February 05, 2020
 

TORONTO,Feb. 5, 2020/CNW/ – TerrAscend Corp. (CSE: TER; OTCQX: TRSSF) (“TerrAscend” or the “Company”), the first global cannabis company licensed for sales in the U.S.,Canada, and the EU, announced today that the terms of its previously announcedUS$10 millionloan (the “Loan”) from Canopy Rivers Corporation (“Canopy Rivers”), a wholly-owned subsidiary of Canopy Rivers Inc. (TSX:RIV, OTC: CNPOF), to TerrAscend Canada Inc. (“TerrAscend Canada”), a wholly-owned subsidiary of TerrAscend, have been amended.

The original terms of the Loan were announced onOctober 2, 2019and included the purchase of 13,243 units, with each unit consisting of (i) one unsecured convertible debenture of TerrAscend Canada with a principal amount ofC$1,000(the “Debentures”), and (ii) 25.2 common share purchase warrants of TerrAscend (the “Original Warrants”) with an exercise price ofC$6.49.

After theOctober 2, 2019announcement of the Loan and subsequent discussions with the Toronto Stock Exchange (the “TSX”), TerrAscend, TerrAscend Canada, and Canopy Rivers mutually agreed to amend certain terms of the Loan.

Pursuant to the amended terms, the Debentures have been converted into aC$13,243,000loan agreement (the “Loan Agreement”) entered into between Canopy Rivers and TerrAscend Canada. Pursuant to the Loan Agreement, interest on the principal amount outstanding will accrue at a rate of 6% per annum, and all interest payments are payable in cash by TerrAscend Canada. The principal amount under the Loan Agreement matures onOctober 2, 2024or such earlier date in accordance with the terms of the Loan Agreement.

TerrAscend has also issued Canopy Rivers 2,225,714 common share purchase warrants of TerrAscend (the “Warrants”), exercisable upon the occurrence of certain events (each such event, a “Triggering Event”), including (i) the federal laws inthe United Statesare amended to permit the general cultivation, distribution and possession of marijuana or to remove the regulation of such activities from the federal laws ofthe United States, and (ii) the stock exchange(s) on which securities of Canopy Rivers or its affiliates are listed permit the investment by Canopy Rivers in an entity that participates in the cultivation, distribution and possession of marijuana inthe United States. The exercise price for the Warrants isC$5.95per share and the Warrants expire onOctober 2, 2024. The Warrants are subject to certain forced exercise rights that may be exercised by TerrAscend if the five-day VWAP of TerrAscend’s common shares equals or exceeds$10.82, subject to the occurrence of certain other conditions, all as more particularly set out in the certificate evidencing the Warrants. The Original Warrants remain issued and outstanding.

TerrAscend Canada intends to use the proceeds for general corporate purposes and the proceeds will not be used, directly or indirectly, in connection with any cannabis or cannabis-related operations inthe United States, unless and until such operations comply with all applicable laws ofthe United States.

The Canadian Securities Exchange (“CSE”) has neither approved nor disapproved the contents of this news release. Neither the CSE nor its Market Regulator (as that term is defined in the policies of the CSE) accepts responsibility for the adequacy or accuracy of this release.

About TerrAscend

TerrAscend provides quality products, brands, and services to the global cannabinoid market. As the first North American Operator (NAO), with scale operations in bothCanadaand the US, the Company participates in the medical and legal adult use market acrossCanadaand in several US states where cannabis has been legalized for therapeutic or adult use. TerrAscend is the first and only cannabis company with sales in the US,Canada, andEurope. TerrAscend operates a number of synergistic businesses, including The Apothecarium, an award-winning cannabis dispensary with several retail locations inCalifornia; Arise Bioscience Inc., a manufacturer and distributor of hemp-derived products; Ilera Healthcare,Pennsylvania’spremier medical marijuana cultivator, processor and dispenser; Ascendant Laboratories Inc., a biotechnology and licensing company committed to the continuous improvement of cannabinoid expressing plants; Solace RX Inc., a proposed Drug Preparation Premises (DPP) focused on the development of novel formulations and delivery forms; and Valhalla Confections, a manufacturer of premium cannabis-infused edibles.TerrAscend holds a cultivation permit in theState of New Jerseyand is pending approval for a vertically integrated medical cannabis operation with the ability to operate up to 3 Alternative Treatment Centers. Additionally, TerrAscend holds a Medical Cannabis Processor License in theState of Utah. For more information, visitwww.terrascend.com.

Original press release

February 04, 2020
 
New Jerseyawarded permits to grow medical marijuana to three more companies,Columbia Care NJ, MPX NJ and Verano
February 04, 2020
 

Minnesota legalized medical cannabis nearly six years ago. Over the years, there have been several unsuccessful efforts to do the same for adult-use cannabis, and it appears that this year will be no different.

In January 2020, the leader of the Democratic-Farmer-Labor Party (DFL) announced they were drafting a bill that would add Minnesota to the list of states that have legalized, taxed and regulated the recreational use of cannabis. Although Gov. Tim Walz has said he supports the move, he faces an uphill battle with opposition from the Republican party. In this review, we take a look at the history of Minnesotas cannabis program, the existing marketplace and potential for future growth.

History

In May 2014, then-Gov. Mark Dayton signed the Minnesota Medical Marijuana Act (SF 2470), a bill legalizing medical cannabis for the treatment of nine severe health conditions. The state began distributing medical cannabis to registered patients on July 1, 2015.

Unlike Oklahoma, which has one of the most liberal cannabis laws in the country, Minnesotas is considered to be among the most restrictive, due to the limited number of health conditions cannabis can be used to treat, the forms that are legal and the costs associated with its use, including a $200 license fee for patients. However, there is a reduced fee of $50 for those who qualify.

The first set of only nine medical conditions that qualified a patient were:

  • Cancer or its treatment (must be accompanied by severe or chronic pain, nausea, or severe wasting);
  • Glaucoma
  • HIV/AIDS
  • Tourette Syndrome
  • Amyotrophic Lateral Sclerosis (ALS or Lou Gehrigs Disease)
  • Seizures, including those characteristic of epilepsy
  • Severe and persistent muscle spasms, including those characteristic of multiple sclerosis
  • Terminal Illness with life-expectancy of less than 1 year (must be accompanied by severe or chronic pain, nausea, or severe wasting)
  • Crohns Disease was extended to Inflammatory Bowel Disease (including Crohns Disease)

Other conditions were later added:

  • Intractable Pain (2016)
  • Post-Traumatic Stress Disorder (2017)
  • Autism Spectrum Disorder and Obstructive Sleep Apnea (2018)
  • Alzheimers Disease (2019)

Chronic pain, the most common qualifying condition in other states, and age-related macular degeneration were added as qualifying conditions, effective August 1, 2020.

As of December 31, 2019, only 18,289 patients had registered for medical cannabis use (0.3% of the state’s population). By comparison, nearly 236,000 patients qualified as of Jan. 2020 in Oklahoma (6.0% of the state’s population). The majority of Minnesotas cannabis patients (11, 807, or 65 percent) are using it for intractable pain. When this qualifying condition was added, participation in the program spiked considerably.

The average age of registered patients is 48.7 years, according to the Minnesota Department of Health. Patients must be certified by a healthcare practitioner and re-evaluated and re-certified annually.

Practitioners include: licensed physicians, physician assistants and advanced practice registered nurses (APRNs). As of Dec. 31, 2019, there were 1,681 healthcare practitioners registered, the majority of which (1,226) are physicians. Unlike in many other states, those certified are not listed by the state, so those who want to obtain a prescription have to do their own research.

Form factors are limited and include: pill, vapor oil, topical or liquid forms. However, starting this summer, cannabis powders, lozenges, gums, mints and tablets will be available. The program does not allow patients to access and use the actual plant or flower.

Existing Market

Only two medical cannabis manufacturers,Minnesota Medical Solutions, LLC, a Vireo Health Company (CSE: VREO) (OTC: VREOF) and privately heldLeafLine Labs, LLC, were registered by the Minnesota Department of Health (MDH) on December 1, 2014. They are responsible for the cultivation, production, and distribution of medical cannabis in the state. They serve Minnesotas 87 counties.

Minnesota Medical Solutions (MinnMed) operates distribution facilities, or Cannabis Patient Centers (CPCs), in four Minnesota cities: Minneapolis, Rochester, Moorhead, and Bloomington. The company recently announced substantial price cuts on many of its products, as well as a new line of oral spray products, in an effort to attract new patients.

MinnMed Oils, Vaporizers and Capsules

LeafLine Labs operates Cannabis Patient Centers in four cities: Eagan, St. Cloud, Hibbing, and St. Paul.

Leafline Labs Oral Suspensions

Each manufacturer will be required to have eight distribution facilities by August along with one production facility (the production facility may be at the same location as a distribution facility). The requirement to operate eight distribution facilities became effective in July 2019. Prior to that, each manufacturer was required to operate four distribution facilities.

Minnesota’s 8 Current Dispensary Locations

Future Growth

Although some modifications to the law have taken place since Minnesota legalized medical cannabis, the program remains rife with limitations. They include a limited number of allowable conditions and the fact that use of the plant continues to be prohibited, which keeps costs high. Still,the additional qualifying conditions, the expansion of form factors and the doubling of the number of dispensaries should drive growth in 2020 following an expansion in 2019 of 27%.

The Marijuana Policy Group projected that Minnesota’s cannabis industry would result in sales of $426 million in the first year if adult-use cannabis was legalized, and that figure would grow to $1.2 billion by year five. It predicted $112 million in tax revenues for the first year, growing to $300 million by the fifth year.

Minnesota Democratic lawmakers have indicated they will continue to push for legalization this year. House Majority Leader Ryan Winkler announced a statewide Be Heard on Cannabis tour to to hear from people in every corner of the state. Rep. Winkler said he will introduce new legislation to legalize adult-use cannabis in 2020, though he has stopped short of predicting whether the legislation will actually make it to the House floor. Meantime, Senate Majority Leader Paul Gazelka has already indicated his opposition to legalization.

February 04, 2020
 

WeedMD Announces Leadership Change and Appoints New CEO as Company Accelerates Growth Initiatives

Angelo Tsebelis, currently President of WeedMD, is appointed Chief Executive Officer

TORONTO, Feb. 04, 2020 (GLOBE NEWSWIRE) — WeedMD Inc. (TSX-V:WMD) (OTCQX:WDDMF) (FSE:4WE) (WeedMD or the Company), a federally-licensed producer and distributor of medical-grade cannabis, announced today that it has appointed Angelo Tsebelis as Chief Executive Officer replacing Keith Merker, who has elected to step down from the CEO and board director roles effective immediately.

WeedMD has gone through a tremendous transformation over the past few years under Keiths leadership and we want to thank him for establishing the building blocks of the company – particularly its successful cultivation platform that is widely recognized as a benchmark of excellence in the industry.

George Scorsis, Executive Chairman of WeedMD

In recognition of the Companys solid footing, we now look to accelerate growth with a renewed focus on expanding sales and distribution initiatives. With his strong business acumen in sales, marketing, and supply chain management, we welcome Angelo to the role of CEO who will look to execute high-margin, commercial transactions that will bring immediate shareholder value, continued Scorsis.

WeedMD is perfectly positioned to move into the next phase of growth and Im honoured to be taking the reins as we steer towards fully monetizing our distribution channels.

Angelo Tsebelis, CEO of WeedMD

Im looking forward to working closely with the integrated team, our partners, patients and stakeholders to accelerate our commercial growth and business development initiatives.

Mr. Tsebelis has close to 20 years of commercial experience in the pharmaceutical, healthcare and cannabis industries. Responsible for setting the strategic commercialization, and product development initiatives for both WeedMD and Starseed, Angelo previously held positions of increasing responsibility with Shoppers Drug Mart and Loblaw Corporation where he built strategic partnerships with pharmaceutical manufacturers, insurers, adjudicators and brokers in the Canadian market. Prior to this, Angelo held various commercial leadership roles at GlaxoSmithKline, Bell Canada and Harrison Associates.

Access WeedMDs investor presentation here.

About WeedMD Inc.

WeedMD Inc. is the publicly-traded parent company of WeedMD Rx Inc., a federally-licensed producer of cannabis products for both the medical and adult-use markets. The Company owns and operates a 158-acre state-of-the-art greenhouse, outdoor and processing facility located in Strathroy, Ontario. WeedMD also operates CX Industries Inc., a wholly-owned subsidiary of WeedMD Inc., from the Companys fully-licensed 26,000 sq. ft. Aylmer, Ontario production facility which specializes in cannabis extraction and processing. With the recent acquisition of Starseed Medicinal Inc., a medical-centric licensed holder with operations in Bowmanville, Ontario, WeedMD has expanded its multi-channeled distribution strategy. Starseeds industry-first, exclusive partnership with LiUNA, the largest construction union in Canada, along with other employers and union groups complements WeedMDs direct sales to medical patients. The Company maintains strategic relationships across the seniors market and supply agreements with Shoppers Drug Mart as well as six provincial distribution agencies where its adult-use brands Color Cannabis and Saturday are sold.

Follow WeedMD, Color Cannabis & Starseed:

Facebook:https://www.facebook.com/weedmd/
LinkedIn:https://www.linkedin.com/company/weedmd/?originalSubdomain=fr
Twitter:https://twitter.com/WeedMD
Instagram:https://www.instagram.com/weedmd/
https://www.instagram.com/callitcolor/&https://www.instagram.com/starseedca/

For further information, please contact:

Original press release

February 04, 2020
 

One of the industrys top-selling, best-tasting edible brands from Cresco Labs enters the Golden State with six new gummies flavors and a refreshed brand identity

CHICAGO, February 4, 2020–(BUSINESS WIRE)–Focused on elevating the edibles industry and bringing greater access to acclaimed chef-driven products that deliver an exceptionally delicious and consistent experience,Cresco Labs(CSE:CL)(OTC:CRLBF) (Cresco or the Company), one of the largest vertically integrated multistate cannabis operators in the United States, announced today the expansion ofMindys Ediblesto California. As the industrys first culinary-backed, cannabis-infused edibles brand, Mindys is precisely dosed, combining distinctive, premium ingredients with iconic flavor combinations. To mark its California arrival, Mindys is introducing six new flavors of its top-selling gummies in addition to a new brand look and website.

Bringing Mindys to California, and to an audience that seeks and appreciates artisanal cannabis creations, was a natural progression for a brand thats thriving in multiple other markets, said Cresco Labs CEO and co-founder Charles Bachtell.

Mindys is well positioned for success in the California market because of Crescos multi-acre cultivation facility in Carpentaria, its state-of-the-art manufacturing facility in Mendota, and its access to the recently acquired Continuum distribution platform.

Charles Bachtell, Cresco Labs CEO and co-founder

Where Mindys dominates and differentiates is in its taste and quality, and we see a category opportunity in California to introduce a culinary creation that consumers can count on. We will leverage our unique array of flavors to appeal to our different audiences and mirror the brand success Mindys has seen in Nevada and Illinois.

Designed to delight the taste buds, the six new flavors of gummies are all vegetarian and non-GMO:

  • Lush Black Cherry: Rich and luscious, like jars of cherries soaked in cabernet and Luxardo, with hints of orange and vanilla. Available in: 100mg THC: 100mg CBD 20-pack tins; each piece = 5mg THC: 5mg CBD
  • Glazed Clementine Orange: Deep, rich, intense orange flavor, with notes of kumquat, clementine and candied orange rind. Available in: 100mg THC 20-pack tins; each piece = 5mg THC and 100mg THC 50-pack pouches; each piece = 2mg THC
  • Cool Key Lime Kiwi:Key lime pie meets creamy, tropical kiwi. Tart and bright with a balanced flavorsummer sorbet with a hint of banana. Available in: 100mg THC 20-pack tins; each piece = 5mg THC and 100mg THC 50-pack pouches; each piece = 2mg THC
  • Honey Sweet Melon:Bright, clean and refreshing yet earthy. Flavors of honeydew and cantaloupe with a touch of honey. Balanced with slight fruity-floral lychee notes. Available in: 40mg THC: 40mg CBD 20-pack tins; each piece = 2mg THC: 2mg CBD
  • Botanical White Grapefruit:Fresh and clean like a grapefruit cocktail. Sour and lip-smacking. Deliciously juicy with an essence of gin botanicals. Available in: 40mg THC 20-pack tins; each piece = 2mg THC
  • Freshly Picked Berries:Flavors of just-picked sweet strawberries and blueberries with mulberries and huckleberries from the Pacific Northwest. Jam-like with a touch of orange blossom. Available in: 40mg THC 20-pack tins; each piece = 2mg THC

Ive always been inspired by the abundant fresh produce in California. With this new gummy line, I really wanted to bring the feeling of walking through expansive farmers markets to cannabis consumers and craft something truly delicious for them to experience.

Chef Mindy Segal

Each new flavor features combinations that are both familiar and unexpected. The fact that they are precisely infused with cannabis is the best bonus.

Mindys gummies are now available in dispensaries across California and are competitively priced. For more details and locations, visitwww.mindysedibles.com.

About Cresco Labs:

Cresco Labs is one of the largest vertically-integrated multi-state cannabis operators in the United States. Cresco is built to become the most important company in the cannabis industry by combining the most strategic geographic footprint with one of the leading distribution platforms in North America. Employing a consumer-packaged goods (CPG) approach to cannabis, Crescos house of brands is designed to meet the needs of all consumer segments and includes some of the most recognized and trusted national brands including Cresco, Remedi and Mindys, a line of edibles created by James Beard Award-winning chef Mindy Segal. Sunnyside*,Crescos national dispensary brand, is a wellness-focused retailer designed to build trust, education and convenience for both existing and new cannabis consumers. Recognizing that the cannabis industry is poised to become one of the leading job creators in the country, Cresco has launched the industrys first national comprehensive Social Equity and Educational Development (SEED) initiative designed to ensure that all members of society have the skills, knowledge and opportunity to work in and own businesses in the cannabis industry. Learn more about Cresco Labs atwww.crescolabs.com.

Original press release

February 03, 2020
 

After breaking an 8-month losing streak in December with a strong close on the last day of the year, theGlobal Cannabis Stock Indexbegan the year with a 5.2% decline, ending at 40.00:

The index, which had 41 qualifying members during the month following the quarterly rebalancing at the end of December, declined 34.1% in 2019:

The decline left the index at levels not seen in over three years, down almost 78% from its early 2018 closing high at 180.02 but up 3.6% from its closing low on December 18th at 38.62:

4 names gained more than 16% during December:

KushCo Holdings rallied after reporting a weak Q1 but maintaining its fiscal 2020 guidance for revenue to exceed $230 million. The company also saw an SEC investigation conclude with the agency taking no action against the company, a move that likely paves the way for it to list on the NASDAQ. Innovative Industrial Properties rebounded sharply after a very successful capital raise of $250 million for the REIT. Liberty Health Sciences posted sequential revenue growth of 52% as it posted sales in Florida during its fiscal Q3 of C$16.1 million with an operating profit margin of 15%. GrowGeneration, which recently listed on the NASDAQ after spending three years on the OTC, pre-announced strong Q4 revenue and provided guidance for 2020 of revenue of $130 million with an adjusted EBITDA margin of 11%.

4 names fell by more than 25% during December:

Sundial Growers, a Canadian LP which went public in August at $13, plunged to an all-time low near $1 following the departure of its CEO and its COO. Green Growth Brands, which has an extensive mall-based CBD business as well as cannabis operations in Nevada, Massachusetts and Florida, didn’t release any substantive news during January but continued to decline after terminating its pending acquisition of Moxie in mid-December. The stock declined 82% in 2019. Canadian LP MediPharm Labs, which is focused on extraction globally, fell after it filed a claim against previously unnamed client HEXO Corp (TSX: HEXO) (NYSE: HEXO) for not making contractual payments amounting to C$9.8 million. MediPharm Labs saw its stock gain 137% in 2019. Greenlane, a 2019 IPO at $17, ended the month at an all-time closing low of $2.44. The Florida-based company distributes accessories, CBD and liquid nicotine products, with substantial exposure to Juul.

We have also published separate reviews of the performance of the Canadian LP Index and the American Cannabis Operators Index:

We will summarize the index performance again in a month. You can learn more about the index members and the qualifications for inclusion by visiting theGlobal Cannabis Stock Index. A more complete analysis of the index is available at420Investor.com. Be sure to bookmark the page to stay current on cannabis stock price movements within the day or from day-to-day.

New Cannabis Ventures maintainssix proprietary indicesdesigned to help investors monitor the publicly-traded cannabis stocks, including the Global Cannabis Stock Index as well as theCanadian Cannabis LP Indexand its three sub-indices. The sixth index, theAmerican Cannabis Operator Index, was launched at the end of October last year and tracks the leading cultivators, processors and retailers of cannabis in the United States.

February 03, 2020
 

CHICAGO, February 3, 2020–(BUSINESS WIRE)–Cresco Labs (CSE:CL) (OTCQX:CRLBF) (Cresco Labs or the Company), one of the largest vertically integrated multistate cannabis operators in the United States, today announced that it has closed therecently announcednon-brokered credit agreement (the Credit Agreement) for a senior secured term loan (the Senior Loan) in an initial aggregate principal amount of US$100 million, with a mutual option to increase the size of the facility to a maximum of US$200 million. The proceeds from the Senior Loan will be used to fund the expansion of operations in Illinois, closing and integration costs associated with pending acquisitions, and other strategic growth initiatives in key markets. A broad syndicate of lenders participated in the Senior Loan, including U.S. based institutional investors together with members of the Companys management and board of directors.

Charlie Bachtell, CEO and Co-founder of Cresco Labs, commented, “The closing of this financing is an important event and was driven by the incredible opportunities we at Cresco have before us.”

We have worked to create a credit facility that strengthens our balance sheet in a non-dilutive manner with no warrants nor convertibility to equity. This transaction demonstrates that capital is available to the top operators in this industry who demonstrate a disciplined strategic focus, a responsible allocation of capital, and a track record of operational execution.

Charlie Bachtell, CEO and Co-founder of Cresco Labs

We are especially pleased to have closed the transaction with such a high-quality group of investors who have displayed a dedicated commitment to the long-term success of Cresco as we continue to execute our vision to build the most important company in cannabis.

Terms

The Senior Loan is for either an 18-month or 24-month term, at the lender’s option. The Loans bear interest at a rate of approximately 12.7% per annum for 18-month loans and approximately 13.2% for 24-month loans, payable quarterly in arrears. The terms of the Senior Loan were negotiated at arms length with the agent and lead investor and include customary restrictive covenants.

About Cresco Labs

Cresco Labs is one of the largest vertically-integrated multi-state cannabis operators in the United States. Cresco is built to become the most important company in the cannabis industry by combining the most strategic geographic footprint with one of the leading distribution platforms in North America. Employing a consumer-packaged goods (CPG) approach to cannabis, Crescos house of brands is designed to meet the needs of all consumer segments and includes some of the most recognized and trusted national brands including Cresco, Remedi and Mindys, a line of edibles created by James Beard Award-winning chef Mindy Segal. Sunnyside*, Crescos national dispensary brand, is a wellness-focused retailer designed to build trust, education and convenience for both existing and new cannabis consumers. Recognizing that the cannabis industry is poised to become one of the leading job creators in the country, Cresco has launched the industrys first national comprehensive Social Equity and Educational Development (SEED) initiative designed to ensure that all members of society have the skills, knowledge and opportunity to work in and own businesses in the cannabis industry. Learn more about Cresco Labs atwww.crescolabs.com.

Original press release

February 03, 2020
 

Curaleaf Completes Acquisition of Select

Company Enters Accelerated Growth Phase with Expanded Leadership Team

WAKEFIELD, Mass., Feb. 3, 2020 /PRNewswire/ — Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) (“Curaleaf” or the “Company”), a leading vertically integrated cannabis operator in the United States, today announced that it closed the transformational acquisition of Select on February 1. With the completion of the acquisition, Curaleaf solidifies its stance as the largest cannabis operator in the U.S. in terms of operational and wholesale footprint, including 53 open dispensaries, and positions the Company well for its next phase of growth.

Curaleaf’s acquisition of Cura Partners, Inc. (“Cura”), owners of the Select brand, includes Select’s manufacturing, distribution, marketing and sales operations marketed under the Select brand name, including all intellectual property.

The close of the Select deal is a major milestone in Curaleaf’s history and marks an unprecedented phase of growth for our company.

Joseph Lusardi, CEO of Curaleaf.

As we’ve scaled, Curaleaf has pioneered the U.S. cannabis industry, and we’re incredibly excited about the future and our leadership role in it. Our entire organization is focused on accelerating our growth as a combined company with two of the fastest growing cannabis brands in the country.

The closing provides tremendous opportunities for synergies as it combines Curaleaf’s national retail locations, vertically integrated structure, wellness brand, product range and East Coast hub with Select’s wholesale model, established lifestyle brand and leading West Coast market presence.

The news comes on the heels of Curaleaf’s acquisition of the Acres Cannabis vertical operations in Nevada, and the awarding of preliminary retail and processing licenses in Utah.

Curaleaf Expands Leadership Team to Drive the Company Forward

With the closing, visionary entrepreneur Cameron Forni assumes the role of President of Select and will focus on driving growth of the Select brand through expansion into new markets. Mr. Forni, who founded Select in 2015, is recognized as a leading authority on vaporizer cartridges and has played an instrumental role in building Select’s award-winning brand, culture and operations across California, Oregon, Arizona and Nevada.

Renowned brand marketer Jason White joins Curaleaf from Select in the newly cr