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StaffOctober 25, 2021
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It’s time for your Daily Hit of cannabis financial news for October 25, 2021.

On The Site

MedMen

The MedMen (OTC: MMNFF) trial in Los Angeles began on Friday with a spicy first day of testimony. Former MedMen Chief Financial Officer James Parker took the stand to testify against his former employers in a case that stems from a 2019 complaint. Parker was once the CFO of the hard-charging California-based cannabis company but abruptly left filing a case that ultimately caused Chief Executive Officer and Co-founder Adam Bierman to leave the company and lose majority voting rights.

According to Law360, Parker told the Los Angeles jury on Friday that he had no choice but to resign after discovering potential illegal transportation of marijuana and stock market manipulation. Law360 also reported that Parker did not finish his testimony and that Parker’s attorney Michael J. Kump of Kinsella Weitzman Iser Kump & Aldisert LLP told the jury during his opening statement that Modlin and Bierman also “created and imposed a toxic management style that included racist, homophobic and sexist slurs and other abusive conduct,” and that Parker complained to them “repeatedly about this.”

Finance Award

The inaugural Frontier Finance Awards were named last week at the MJBiz conference in Las Vegas Nevada where Currency Research was broadcasting The Cash Show live from the event.  Awarding the prizes to each bank was noted industry veteran Todd Kleperis who founded cannabis banking solution company Payzel after selling his armored car business in cannabis.

The Frontier Finance Award was given to Fresno First Bank for “Growth In Market” and First Federal Bank received the “Strongest Growth in Lending.” This is the first time banks have competed for the best bank in Cannabis.  Banks have notoriously been remiss about their work in cannabis but the tide is changing and more banks are competing for the best financial performances they have done to gain industry acceptance.

MJ Biz Con

This year’s MJ Biz Conference confirmed over 27,000 people attended the show. In addition, the event had 1,300 exhibitors. Green Market Report had a chance to speak with MJ Biz CEO Chris Walsh on the exhibitor floor. 

In Other News

 InterCure Ltd. (NASDAQ: INCR) (TSX: INCR.U) announced preliminary unaudited revenue of CAD$24 million for the third quarter of 2021, representing another record quarter of high sequential and year-over-year revenue growth.  All amounts are expressed in Canadian dollars  

Record revenue expected to be an estimated CAD$24 million, 3 times greater than Q3 2020 and up more than 36% compared to prior quarter sequentially. Increased market share due to solid demand for Canndoc’s branded products and expansion of InterCure’s retail footprint. 

Commenced trading on NASDAQ in September under the symbol INCR. The company plans to file its full financial results for the third quarter of 2021 on Monday, November 15, 202


StaffOctober 25, 2021
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The inaugural Frontier Finance Awards were named last week at the MJBiz conference in Las Vegas Nevada where Currency Research was broadcasting The Cash Show live from the event.  Awarding the prizes to each bank was noted industry veteran Todd Kleperis who founded cannabis banking solution company Payzel after selling his armored car business in cannabis.

The Frontier Finance Award was given to Fresno First Bank for “Growth In Market” and First Federal Bank received the “Strongest Growth in Lending.” This is the first time banks have competed for the best bank in Cannabis.  Banks have notoriously been remiss about their work in cannabis but the tide is changing and more banks are competing for the best financial performances they have done to gain industry acceptance.

Kleperis was best known previously as the founder of HARDCAR which moved the currency for the cannabis industry as well as moved the product for some of the best brands in cannabis.  HARDCAR was the first company in the nation to both move the product and cash as a legal cannabis distribution company and armored car firm. Having moved billions of dollars and seeing where the industry was headed, Todd sold HARDCAR and pursued building a fintech firm.

Payzel was formed out of his work at Harvard University where he met his now co-founder, Lauren Cohen a noted expert on fintech.  The two set out to change the face of banking high risk industries and have brought forward amazing banks that already are in the hardest frontier industry there is today. Payzel has received funding from The Holt Exchange, the largest fintech group in Canada.  At the forefront of any industry, there are those that take the risks to make things happen. Payzel believes those frontier industries are the way of the future and deserve banking today.

 

 


Debra BorchardtOctober 25, 2021
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The MedMen (OTC: MMNFF) trial in Los Angeles began on Friday with a spicy first day of testimony. Former MedMen Chief Financial Officer James Parker took the stand to testify against his former employers in a case that stems from a 2019 complaint. Parker was once the CFO of the hard-charging California-based cannabis company but abruptly left filing a case that ultimately caused Chief Executive Officer and Co-founder Adam Bierman to leave the company and lose majority voting rights.

According to Law360, Parker told the Los Angeles jury on Friday that he had no choice but to resign after discovering potential illegal transportation of marijuana and stock market manipulation. Law360 also reported that Parker did not finish his testimony and that Parker’s attorney Michael J. Kump of Kinsella Weitzman Iser Kump & Aldisert LLP told the jury during his opening statement that Modlin and Bierman also “created and imposed a toxic management style that included racist, homophobic and sexist slurs and other abusive conduct,” and that Parker complained to them “repeatedly about this.”

The report stated that MedMen’s attorney William F. Dugan of Baker & McKenzie LLP “told the jury during opening statements that Parker was a poor CFO who was in over his head and that he negotiated the terms of his own contract. Dugan also said Parker violated his contract by suddenly quitting without giving a 90-day notice, and did so just as he had been informed he was being put under a performance review.” For its part, MedMen is paying for Parker’s legal fees which can go as high as $500,000 a year.

Law360 also noted that attorneys for the individual defendants, Bierman and Modlin, did not deliver any opening statements. 

The scandal broke not long after MedMen became a publicly-traded company when Parker abruptly resigned and filed a case that exposed many scandalous details about the co-founders. The most serious claims accused the founders of transporting cannabis across state lines and paying someone to buy the company’s stock in order to artificially inflate the price. In addition to those allegations, Parker also claimed that the MedMen dispensaries were accepting credit card charges, which are not allowed by the major credit card companies MasterCard and Visa. In addition to those allegations, Parker cited the toxic workplace and abusive language he was subjected to by Bierman. MedMen also claims that Parker is also guilty of inappropriate and offensive comments.

Background

MedMen began trading publicly in 2018 and was described as the cannabis industry’s first unicorn with a billion-dollar valuation. Parker led the company’s move to become a publicly-traded company, but then he resigned in November 2018. This was seen as a red flag as it is pretty unusual for a CFO to leave a company within months of going public. MedMen was also changing the terms of its capital raise while reporting big losses and mediocre revenue (when compared to the company’s valuation).

It was in February 2019, that Parker filed the lawsuit claiming wrongful termination saying MedMen had begun searching for a new CFO while he was still performing those duties. He alleged that MedMen ordered him to make payments from the company’s money for personal expenses by the co-founders. These expenses ranged from high-tech safe rooms in their homes to special-ordered vehicles. He also accused the co-founders of taking private jets and bringing along friends and family and basically using the MedMen company money to pay for an extravagant lifestyle. 

Parker alleged he sent money to a “consultant” in Canada that was propping up the stock when it sold off. Parker claimed that he personally paid for company items with his credit card because the co-founders Bierman and Andrew Modlin were able to get a large enough credit line due to their work in the cannabis industry. Parker said in the court filing that these expenses could reach as high as $150,000 to $250,000 a week. 

More Problems

In March 2019, MedMen’s CEO Bierman claimed ignorance when it came to light that the OTC Markets were making inquiries into stock promotion activity by a company hired by MedMen. The website www.marijuanastox.com ran a story created by a third-party consulting firm that was intended to promote MedMen stock. By April, more top executives began to leave the company. COO Ben Cook and General Counsel Lisa Sergi both resigned along with the Senior Vice President of Corporate Communications Daniel Yi. 

The expenses at the company remained elevated, while the revenues were not enough to cover the costs. Rumors of the company being unable to pay vendors caused even more problems. 

In addition to that, MedMen made great fanfare about buying the privately-held PharmaCann only to terminate the deal months later. 

CFO Churn

By August 2019, MedMen was churning through CEO’s like tinder dates. Jim Miller had been appointed interim CFO after Parker resigned. He was replaced by Michael Kramer in December 2018, who was terminated in October 2019. Zeeshan Hyder was named the new CFO in October 2019. Hyder only lasted a little over a year before leaving in December 2020. Reece Fulgham became the new interim CFO and remains in that role today. 

Bierman Ousted

It wasn’t until January 2020, that co-founder Adam Bierman stepped down and relinquished his super-voting shares. The company’s COO Ryan Lissack took over as interim CEO. In March 2020, Tom Lynch was named interim CEO and was made the permanent CFO in July of 2021. He remains in that role today. 

MedMen has since sold several assets and most recently reported that its 2021 fourth-quarter revenue was $42.0 million, up 55.4% year-over-year and up 18.5% from the previous quarter. 

 


Julie AitchesonOctober 22, 2021
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Trick or treat times are looming in all of their ghostly glory and cannabis companies are rolling out their seasonal offerings to tempt those whose door-to-door candy soliciting days are past. Candy Tracker, launched by data and tech company Numerator (which provides weekly insight into consumer buying behavior) shows that their efforts are paying off, with the pre-Halloween candy buying period capturing a record number of consumers in 2021.

Halloweed

Significantly, Numerator’s analysis shows that consumers are buying more candy despite decreased advertising, reflected in the fact that candy-related ad spending is down 29% from what it was in 2020 and 34% from 2019. This bodes well for cannabis companies rolling out the orange and black carpet for Halloween as they are likely to see a hefty return with a smaller investment of advertising dollars. 

This isn’t to say that companies aren’t getting creative during candy’s spookiest season. Michigan cannabis cultivator Fluresh is giving its Fast-Acting Drink Enhancer (THC-infused) a promotional boost with some seasonally-inspired recipes like “Zombie Brain Cannabis-Infused Jell-O Shots” and Insa has launched its limited edition Pumpkin Pie Caramel Crumble THC-infused chocolate bar. With specials on favorite weed varieties and bongs crafted to look like skulls or classic horror villains, there is not shortage of ways to mark October 31st, but the as Numerator’s data suggests, candy is king when it comes to Halloween. 

Increased Candy Sales

This Halloween uptick is a continuation of an overall positive trend in candy consumption, which is up from both 2019 and 2020. Sales of seasonal candy are up 29% in the second half of 2021 compared to a year ago and 43% from figures posted two years ago. Non-seasonal candy as an everyday purchase is up 19% against 2020 numbers and 24% from sales in 2019. Numerator’s data shows that consumer trips to purchase their daily fix of the sweet stuff is up 12% from a year ago. According to Phil Stanley, Global Chief Sales Officer for The Hershey Company (which has experienced sales increases commensurate with this trend) higher sales figures include early and mid-season activities like decorating, baking and movie nights, with a likely increase in activities like parades, parties and trick or treating now that vaccines are easing some Covid anxiety. 

 


StaffOctober 20, 2021
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The privately-held cannabis  mortgage real estate investment trust (mREIT) Pelorus Equity Group has increased it $250 million to $1 billion. So far, Pelorus has completed 58 commercial real-estate loan transactions and has  deployed $225MM to cannabis businesses and real estate owners.

“Pelorus intends to use the net proceeds from the increased offering to continue to be the best-in-class non-bank real estate lending solution for cannabis owners and operators across their companies’ life cycles,” said Travis Goad, managing partner of Pelorus Equity Group. “This will include a new stabilized lending program with three- to five-year amortizing loans to quality sponsorship, and be offered to current borrowers upon construction completion, as well as to new borrowers that meet the company’s underwriting criteria.”

The Pelorus portfolio now totals 1,850,000 sq. ft. in eight states across the U.S. The company also said it has the has the potential to approve construction draws to reimburse the borrowers in an average of one to three days and with one agreement covering the financing of the entire project.

“Our Company launched its $100MM offering in 2018, and then in 2020, upsized it to $250MM, but with the 300% growth we’ve experienced in 2021, we continue to see an acceleration of institutional interest in our thesis and core strategy,” said Dan Leimel, CEO of Pelorus Equity Group and manager of the Pelorus Fund. “As more owners and operators look for quicker draws to generate revenue sooner and a steady flow of deals in our pipeline and investors enter the emerging sector, we expect to have more than $250MM assets under management by the end of the year and for our growth to only continue to accelerate at a rapid pace over the next year. We look forward to continuing to capitalize on our deep understanding of the sector, industry relationships and firsthand experience in cannabis commercial real estate to make more high-impact investments that deliver added value to both our clients and investors.”


StaffOctober 19, 2021
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Greenlane Holdings, Inc., (Nasdaq: GNLN) is buying vape companyDaVinci for an undisclosed amount. The deal is expected to close in the fourth quarter of 2021.

“DaVinci leads the way in innovative portable vaporizers and we are thrilled to bring them into our owned brand portfolio,” said Nick Kovacevich, CEO of Greenlane. “This acquisition perfectly illustrates our mission of elevating all elements of the consumption experience, and we look forward to building on our recent success of acquiring strategic and accretive brands. As we continue to execute on our robust pipeline of acquisition targets, we aim to ensure our customers have a best-in-class product selection, while driving profitability and shareholder value by increasing our higher-margin owned brand offerings. The team at DaVinci shares our commitment to providing curated, convenient experiences to consumers, and we look forward to welcoming them to Greenlane and to working together to bring more innovative products to our customers.”

DaVinci is an industry leading brand differentiated through its groundbreaking Clean First™ innovation, which employs medical grade materials and total quality manufacturing processes to ensure the cleanest technology goes into the development of its products. DaVinci’s product line has grown significantly since the launch of its award-winning IQ vaporizer in 2016 to include new innovative models such as the MIQRO, the world’s smallest premium loose-leaf vaporizer, IQ2, the world’s first on-device dosage control, and the IQC, equipped with a patented ShareSafe™ mouthpiece created from an FDA-approved antimicrobial polymer.

 

“At DaVinci we have been committed to approaching product development with vision and imagination, and we are thrilled to join Greenlane as strong partners in innovation. We are excited to join a team that shares our drive to harness new and changing technologies to engineer consumer experiences that align with the evolving needs of a dynamic, growing cannabis industry,” said Cortney Smith, Founder and CEO of DaVinci.

DaVinci is an industry-leading brand differentiated through its groundbreaking Clean First innovation, which employs medical-grade materials and total quality manufacturing processes to ensure the cleanest technology goes into the development of its products. DaVinci’s offerings include many award-winning vaporizers.


Tee CorleyOctober 19, 2021
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In spite of, or perhaps in light of, the COVID-19 pandemic, we’re seeing the “new normal” still work itself out, resulting in sweeping changes across every industry.

Agricultural workers strike for better pay and conditions. Hiring managers are at a loss for workers. The supply chain is grinding to a halt. As U.S. workers seek more interesting jobs with better pay in fields they favor, FlowerHire, a cannabis talent recruiting agency, is finding that the cannabis industry is filling that void.

The Factors Affecting Cannabis Job Growth in 2021 and 2022

Pre-pandemic, the West Coast reigned in the realm of cannabis reform, with Washington, Oregon, and of course, California, completely legalizing recreational use at the state level.

In the heat of COVID lockdowns and one of the most polarizing elections in U.S. history, Arizona, New Jersey, Montana and South Dakota legalized recreational use in 2020, and Florida reformed its medical marijuana laws.

Marijuana is medically legal in Pennsylvania, and a bill was introduced to legalize it recreationally on 28 September 2021.

And let’s not forget that marijuana became legal in Virginia on 1 July 2021. While the groundwork is still being laid for retail sales, they are currently expected to begin in 2024.

Like a reverse Manifest Destiny, U.S. citizens’ demand for marijuana law reform is making its way to the East Coast, and so are its jobs.

What Does the Data Say?

FlowerHire, a recruiting agency that pairs talent with jobs in the cannabis industry, has some data to share which promises hope for cannabis jobs in 2022.

Founded in 2017, FlowerHire offers job recruiting and retaining services for hemp companies and their employees, plus an AI-driven software called FlowerHire X™ to help them optimize their team. As a result, FlowerHire has unique access to data across the cannabis market. The agency released a report in October 2021 outlining the current state and future outlook of leadership jobs in the cannabis industry.

In short: look out East Coast! It’s a veritable Green Rush. Opportunity is out east as FlowerHire asserts that 80% of new job demand is outside of California, and 68% of people FlowerHire has paced in 2021 have been east of the Mississippi, up from 50% in 2020. If you have experience in management and leadership positions, Florida, Pennsylvania, Massachusetts, and Michigan want you. FlowerHire has based this data on six-figure cannabis jobs with an average salary of $140,000 per year.

So where can you go to find these high-paying careers in cannabis?

According to FlowerHire CEO David Belsky, “Cannabis job growth in Florida came out of nowhere.” Job growth in Florida quite literally went from 0.0% to 7.5% from 2020 to 2021, with the recruiting agency citing Florida-based brands Curaleaf, Trulieve, and Liberty Health as the top hirers.

Pennsylvania, too, saw massive growth, going from 1.1% of FlowerHire’s job placements in 2020 to 8.5% in 2021.

Meanwhile, Massachusetts and Michigan are holding on strong to moderate pieces of the hiring pie. Belsky reports that job creation in these states is happening across all stages of the chain, from cultivation to warehousing to retail.

What Does This Mean for Cannabis Jobs in 2022?

If you’re on the hunt for a job in cannabis, you’re no longer required to uproot your life and set off for sunny (and expensive) California.

Belsky agrees. “This [data] shows that legalization is spreading nationwide and gaining traction leading to more emerging cannabis job markets.”

Indeed, overall investment in cannabis continues to rise as new states come on board. And it’s not just in recreational markets. Leadership positions in medical markets on rising fast, lending credence to what most of us already know: there are medical benefits to cannabis.


StaffOctober 18, 2021
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It’s time for your Daily Hit of cannabis financial news for October 18, 2021.

On The Site

IIPR

Innovative Industrial Properties, Inc. (IIP)(NYSE: IIPR) has purchased a 201,000 square foot industrial property in Desert Hot Springs, California from Gold Flora, LLC for $51 million. Gold Flora will then lease the building and is expected to complete additional improvements for the property, for which Innovative Industrial has agreed to provide reimbursement of up to $9.0 million. Assuming full reimbursement for the improvements, IIP said its total investment in the property is expected to be $60.0 million.

People Moves

Two leading cannabis companies have made major changes in the C-suite on Monday morning. The biggest move came from HEXO Corp.  (TSX: HEXO)(NASDAQ: HEXO) which announced that its CEO and Co-Founder Sebastien St-Louis was leaving immediately and that the company was engaging in a structural reorganization. In addition to the CEO, HEXO said that its Chief Operating Officer, Donald Courtney was also out. The Special Committee of the Board for Succession said it was in advanced discussions with a preferred CEO candidate and expected to make an announcement soon. Courtney will remain as COO until a suitable replacement is named. Jushi Holdings Inc. (CSE: JUSH) (OTCQX: JUSHF) announced the appointment of Edward (“Ed”) Kremer as its new Chief Financial Officer. 

In Other News

Xebra

Xebra Brands, is now trading on the Canadian Securities Exchange (CSE). Xebra is well-positioned in Mexico within the USMCA Free Trade Zone (formerly NAFTA). Xebra is 1 of 5 companies whereby two will be selected by the government of the Netherlands to participate in cultivation trials, to supply all medicinal cannabis sold through Dutch pharmacies, under guaranteed government contracts. Xebra has developed approximately 40 cannabis-infused formulations and six distinct beverage brands, each protected by trademark IP.

Auxly

Auxly Cannabis Group Inc. (TSX – XLY) announced that the company has moved to the #6 LP position in Canada for total cannabis sales as of the end of Q3 2021. After the successful launch of new product offerings during the third quarter of 2021, such as the introduction of the Back Forty 40s pre-rolls and differentiated dried flower offerings, Auxly secured 5.7% share of the total cannabis market in Q3 2021, up from 4.9% in Q2 2021, ending the quarter with 6.4% share of the market in September. In addition to the overall growth and expanded presence in the dried flower segment, Auxly also continues to hold the #1 LP position in Canada for Cannabis 2.0 product sales with 15.6% market share in Q3 2021. Powered by a 24.7% share of the vapor market – the largest of any Canadian LP by a significant margin – the Company’s organic growth in each of the Cannabis 2.0 categories it participates in is a testament to the quality and efficacy of its product suite that Canadian consumers have come to rely on.


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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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