Business Archives - Green Market Report

Debra BorchardtDebra BorchardtMarch 22, 2019


MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF)  has signed a binding term sheet for a senior secured convertible credit facility of up to $250 million from funds managed by cannabis investor Gotham Green Partners.  MedMen said that it thinks this is the largest investment to date by a single investor in a publicly traded cannabis company with U.S. operations.

The investment from GGP will be in the form of convertible senior secured notes issued by MM CAN USA, Inc., a subsidiary of the company, totaling up to $250 million on a private placement. MedMen will receive the investment in three tranches assuming the company achieves certain price thresholds and other conditions. The first tranche is for $100 million, with the second tranche of $150 million delivered in two chunks of $75 million. That second investment will be made available at the six-month mark of the closing date and the third six months following the second.

“This strategic partnership with Gotham Green Partners represents another key milestone for MedMen and stems from our long-standing relationship with The Cronos Group and GGP’s brand portfolio,” said Adam Bierman, CEO of MedMen. “The growth capital will be used to operationalize the balance of our footprint and we look forward to creating further alignment with GGP and their global cannabis platform.”

The company said it plans to use the money from drawdowns on the facility for the following purposes:

  • Operationalize existing retail licenses, with a focus on Florida, where the Company is licensed for 30 stores
  • Integrate assets acquired through pending transactions, including those related to PharmaCann, LLC
  • Accelerate geographic expansion through bolt-on acquisitions and investments in core markets
  • Support national roll-out of higher-margin in-house branded products
  • Continue to invest in technology and digital infrastructure, with a focus on delivery and loyalty programs
  • Consolidate the supply chain and enhance margins by ramping up cultivation and production capabilities

“We continue to be impressed with MedMen’s industry-leading retail execution and iconic branding. With MedMen’s fortified balance sheet, the Company’s future has never been brighter,” said Jason Adler, managing member of GGP. “We feel fortunate to have the opportunity to take such a significant stake in MedMen and begin to work actively with the management team and the board to help the Company achieve its goals.”


The statement outlined how MedMen will pay back the investment:

All Notes will have a maturity date of 36 months from the closing date (“Maturity Date”), with a 12-month extension feature available to the Company on certain conditions, including payment of an extension fee. Notes will bear interest from their date of issue at LIBOR + 6.0% per annum. During the first 12 months, interest may be paid-in-kind at the company’s option such that any amount of PIK interest will be added to the outstanding principal of the Notes. The Company shall have the right after the first year, to prepay the outstanding principal amount of the Notes prior to maturity, in whole or in part, upon payment of 105% of the principal amount in the second year and 103% of the principal amount thereafter.

All or a portion of the Notes will be convertible, at the option of the holder, into class B subordinate voting shares of the company at any time prior to the close of business on the last business day immediately preceding the Maturity Date. The conversion price of each tranche of Notes is as follows:

i) for Tranche I Notes, the conversion price will be equal to 115% of the lesser of  (a) US$3.10, which represents the closing price of the Subordinate Voting Shares on the Canadian Securities Exchange on the trading day immediately preceding the announcement of the Facility, and (b) the closing price of the Subordinate Voting Shares on the trading day immediately preceding the closing date; and

ii) for Tranche II and Tranche III Notes, the conversion price will be equal to the lesser of (a) 115% of the 20 trading day volume weighted average trading price of the Subordinate Voting Shares as of the trading day immediately preceding the date of issue of such tranche, and (b) US$7.00.

The company may force the conversion of up to 75% of the then outstanding Notes at the applicable conversion price(s) if the volume weighted average trading price of the Subordinate Voting Shares (translated to US dollars) is US$8.00 for any 20 consecutive trading day period. If 75% of the then outstanding Notes are converted by the company, the term of the remaining 25% of the then outstanding Notes will be extended by 12 months.

Video StaffVideo StaffMarch 22, 2019


Tilray Inc. (TLRY) delivered its earnings on Monday with Revenue increasing to $15.5 million, up 203.8% versus the fourth quarter of last year and beating the Yahoo! Finance estimate for $14.15 million. Net loss for the quarter was $31.0 million or $0.33 per share compared to $3.0 million or $0.04 per share for the prior year period. Net loss includes non-cash stock-based compensation charges of $4.1 million compared to $34 thousand in the prior year period.

Curaleaf Holdings, Inc. (CSE: CURA) (OTC: CURLF) reported its results for The fourth quarter with total revenue of $32 million increasing 49% sequentially and 408% over the 2017 fourth quarter. Curaleaf delivered a net loss of $16.5 million, but this was a steep drop from the previous quarter’s loss of $33 million. The company also said it was acquiring Nevada-based Acres Cannabis in a deal valued at $70 million that is expected to close in 2019.

TerrAscend Corp. (CSE: TER; OTCQX: TRSSF) reported its fourth-quarter revenue that increased to C$4.8 million and full-year revenue for 2018 C$6.6 million.

Grassroots launched its convertible note financing round back in December with the plan to raise at least $40 million in proceeds. However, due to strong demand, the financing round was ultimately increased to accommodate $90 million.

California-based  MJIC, Inc. successfully closed a private round of financing resulting in gross proceeds of U.S. $15 million.

Valens GroWorks Corp. (CSE: VGW)  entered into an agreement with AltaCorp Capital Inc. under which AltaCorp has agreed to purchase shares valued at $30 million.

Lots of stock moves this week

Vireo Health International, Inc., a multi-state cannabis company, listed on the Canadian Securities Exchange under the stock symbol.

Aleafia Health Inc. (TSX: ALEF) (OTC: ALEAF)  said that its common shares began trading today on the Toronto Stock Exchange. The common shares will continue to trade under the symbol “ALEF.”


Vape distributor Greenlane Holdings, Inc., a filed to go public. The company wants to list its Class A common stock on the Nasdaq Global Market under the symbol “GNLN.” But so far the Nasdaq has turned almost every cannabis company down.

Sean HockingSean HockingMarch 21, 2019

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AUTHOR: Craig Small Hoban Law Group

Authored By:  Craig Small, Hoban Law Group

With thirty-three states and the District of Columbia legalizing marijuana in some form or another in the United States, it is safe to say marijuana use is gaining social and cultural acceptance. But as public acceptance of marijuana use continues its mainstream march forward there are still bastions of resistance that maintain a dissimilar approach to marijuana and see it as a detrimental element to their organizations. These holdouts prohibit marijuana use and take punitive measures against members of their organization that engage in marijuana use. One such stronghold is professional sports.

The top four sports in the United States are American football, basketball, baseball, and ice hockey. Each sport approaches marijuana policy through their respective collective bargaining agreements as negotiated between the team owners (usually the league or association) and the players (as represented by a player’s association.) These various collective bargaining agreements create contractual obligations between the league and the players regarding controlled substance abuse policies and expiration dates whereby the contract expires. As the expiration dates approach, the league and players engage in negotiations to form the next collective bargaining agreement and it is during these negotiation periods that present opportunities for the various leagues to modify their controlled substance abuse policies; specifically, marijuana use amongst the players.

To date, each major sport (with the exception of ice hockey) has taken a punitive approach towards marijuana use by players and has structured the collective bargaining agreement to impose severe sanctions, suspensions and possibly expulsion should players use marijuana. But we are now in an era where these restrictive marijuana policies in sports need to be reviewed and revised in light of the legality of the substance in a growing number of states and countries and the negative effects a ban on marijuana is having on the players themselves. By banning marijuana use, players are forced to forego marijuana as a viable and effective source of pain relief, anti-inflammatory treatments and anti-anxiety measure merely because its use will subject the player to fines, game suspensions and possibly expulsion from the league should the player test positive for marijuana. The players only options are medical treatments that don’t violate the league substance abuse provisions despite the possible harmful side effects of these treatments; thus, removing the player’s choice of medical treatment over an antiquated view of what marijuana is and what it does to the human body.

The governing organization in North American that organizes professional hockey is the National Hockey League and they have taken a very progressive approach towards marijuana policy. The NHL’s substance abuse policy, as it is applied to marijuana, has a focus on confidentiality and treatment; not punishment. Players are confidentially tested for performance-enhancing drugs and the name of the player is kept confidential from the NHL, Players Association and the player’s team should that player test positive for marijuana as a byproduct of drug testing. Upon testing positive for marijuana, the anonymity of the player is only revealed to the doctors that administer the NHL drug testing program and those doctors only contact the player directly. These medical professionals take this opportunity to determine what role marijuana plays in the player’s career and, as a team, work with the player on any alternative treatments should the player desire alternative treatment. If the player declines to enter the treatment program there are no negative repercussions to the player’s decision and the player’s name, test results and treatment decision are kept confidential from the NHL, the Players Association and the player’s team.

The only negative repercussions to a player’s positive test result are if the medical professionals determine the levels of THC in the player’s system are “dangerously high level…such that is causes concern for the health or safety of the Player or others…”   Even under these circumstances, the player’s name is kept confidential from the NHL, Players Association and the player’s team and the player is referred to mandatory evaluation and treatment as directed by the medical professionals. At that point, the player’s penalties are only administered to the player should the player enter into terms and conditions for treatment and then violate those terms and conditions.

The National Football League, National Basketball Association and Major League Baseball (with a particular focus on Minor League Baseball) should all look to the National Hockey League when restructuring their archaic policies regarding players marijuana use. As science advances our knowledge of marijuana’s effect on the human body and cultural stigmas against marijuana users become less and less prevalent, professional sports associations continually have opportunities to conform their marijuana policies to better reflect the medical benefits of marijuana and stop punishing players for engaging in behavior that society has deemed acceptable and legal.

The NFL is first of these professional sports to have their collective bargaining agreement expire after their 2020 season. Marijuana policy reform has momentum in many areas of society and culture, but we can look toward the next NFL collective bargaining negotiations as a litmus test to see how far we have come and how far we have left to go.


Craig Small is a Senior Attorney at Hoban Law Group. Mr. Small is a Past President of The Boulder County Bar Association and is an active member of the Colorado Bar Association and the National Organization of the Reform of Marijuana Laws.


This article has been prepared for informational and general guidance purposes only; it does not constitute legal or professional advice. You should not act upon the information contained herein without obtaining specific professional advice. No representation or warranty (express or implied) is made to the accuracy or completeness of the information contained in this publication. Hoban Law Group, its members, employees, and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based thereupon.



Sean HockingSean HockingMarch 21, 2019

If you wish to re-publish this story please do so with the following accreditation
AUTHOR: “Jordan Zoot.  “aBIZinaBOX Inc., CPA’s”

Long Ago – Far Away……..

Thirty-eight years be exact. I joined Arthur Andersen LLP’s Tax Dept. in New York, specifically the Real Estate Group[1] in October 1983.

I was promoted to Tax Senior six months later, and Tax Manager two years after that. I was admitted as an SC Tax Partner, five years later, five months after my thirtieth birthday. I had exceptional technical tax and IT skills and in retrospect, I realize I had none of the “soft skills” or people management skills that came much later in life and, I should add, with a significant degree of pain.

Perhaps the greatest gift I received was becoming an AA Tax Partner. If I was struggling with anything, technical tax issue, difficult client or staffing issue, there were twenty-two other Tax Partners in the New York office and hundreds in the firm phone book all over the world.

The ability to reach out and instantly grab the answers from a mentor and Partner were invaluable. There are many in the CPA profession that talk about what they “got” from a Big 4 firm, but never scratched the surface of what those of us who were admitted to the partnerships got.

I left Arthur Andersen almost quarter of a century ago, and it would be an understatement to say that the emergence of the hedge fund as a vehicle for raising capital and the invention of broadband[2] changed everything.

I remember the first week after I left Andersen I had 386-25 computer that cost a mind-boggling $15K delivered with a  64KB ISDN connection [which was blazingly fast compared to the usual pedestrian dial-up with accompanying blips and beeps] installed. The added pain of “up-down” replication to get Tax Notes delivered over Lotus Notes could test the patience of a saint…it would be considered maddening or even madness in 2019, but, at the time, it was magic for a start-up firm. The improvements in technology over the past twenty years have been staggering.

However, there are two very significant items that have barely changed at all.

They are…

  • Younger professionals develop critical judgment and client interaction skills one way, through observation and intensive mentoring by an experienced practitioner [when I say experienced, I mean Director level for new Analysts, and Partner level for Associates and above. Our firm refers to our process as “Special High-Intensity Training [“SHIT”].
  • The second critical interaction is that practice leaders from Director and up to Managing Director-CEO’s do best when they have partners and peers that they respect for both professional judgment and technical skills[3]

We continue searching for ways to create opportunities for those two items through social media, Slack channels, and virtual “everything and anything”. We have had excellent results in our alternative asset hedge fund, professional services, real estate, and tax controversy practices.

The issue, though,  has bedeviled us in our practice with the legal cannabis industry.

Our experience has been that the quality of attorneys, certified public accountants [“CPA’s], and enrolled agents [“EA’s], collectively “Circular 230 Tax Practitioners” have had substantial issues with consistently high-quality technical skills and experience, and an abhorrent level of self-aggrandizement.

Our view is that, perhaps, one out of a thousand Circular 230 Tax Practitioners can justify self-designation as an expert.

We have made a substantial effort to provide cannabis industry businesses with tools to address both issues.

Our article, also published in Green Market Report…..

It’s Tax Time: Choosing Cannabis Tax Advisors

Has been incredibly well received.

Also, do read…..

“Cannabis CPA Becomes A Cannibal

Provides some important reminders to all of us that no matter how skilled and experienced we may be if we get sloppy or lazy, we destroy our hard-earned credibility.


“Self-Aggrandizement – Cannabis Industry Professionals, CPA Firms – Virtual versus Reality”


Addressing Professional Incompetence

Highlight the dangers and risks of self-aggrandizement.

We turn our attention to the selection of mentors and professionals who we can rely on to seek to replace the function of the partners in my Andersen office in New York.

We have chosen to approach the task by offering our view of representative examples of four group of Circular 230 Tax Practitioners whom we have observed either with clients, in webinars or on the web.

The selection of the following individuals was based solely on the author’s judgment and does not represent the views of the Cannabis Law Report.

We trust that our readers are both sophisticated and sufficiently experienced to draw their own inferences about the basis of my judgment. I have removed myself from listing in an attempt to make this more objective.

We don’t expect it to be perfect, and the publisher has committed to offering any of the listed professionals the opportunity to agree with, disagree with, challenge or refute the author’s judgments

Contact Cannabis Law Report

Here goes…

And our special bean counter rating!

Exp. Senior Practitioners – > 4 years or Practice Leaders


Skilled Practitioners – < 4 years as a Partner

Practitioners with Skill, Experience or Judgment Deficiencies


Practitioners with Serious Deficiencies


We thought it would be useful to continue the discussion by beginning an effort to highlight the view and thoughts of some of the excellent up and coming CPA’s we have had the pleasure of meeting along the way

Perspective from Shane Eloe, CPA

Share is a CPA specializing in tax consulting, planning, and preparation. I have a focus on the agriculture industry and enjoy helping clients utilize technology to improve their processes. Specialties: farm / agricultural taxation tax consulting, agricultural financial reporting, tax planning, tax preparation

As one of 3 owners in my firm, I have significant influence and business agility to seize opportunities that will pass other firms by while they analyze the situation and look to others for best practices. However, sometimes I find myself lacking perspective and grasping at straws trying to find the right resource for additional perspective. I have had several mentors both inside and outside my firms as well as mentors outside of the profession. Some have inspired me, others opened doors for me, and some have shown me what not to do, allowing me to learn from their mistakes.

The opportunities and inspiration from the external part of this network have given me the ability to develop my career and my firm in a way that would be an insurmountable task otherwise. Jordan has become a prominent member of my external network as he has invested countless hours in sharing knowledge, inspiration, and friendship with me over the years we have known each other. I had no idea where our interactions would lead, but I had the distinct feeling that I would be in for an interesting ride that would take me down pathways I might not otherwise have considered.

This has shown me firsthand the ability to step up my game in a small practice environment if I open my career development to the influence of inspiring external mentors that are doing something unique in the profession. I would not have been interested in a significant level of interaction with a senior practitioner running an average firm that’s doing nothing interesting. I value the opportunity to indulge the influence of other practitioners who think outside the box.

This influence leads me to pursue something bigger than the normal business development and firm management goals that are standard for others in my position. While others look for community involvement and a strong local network, I look for a national platform and an industry that’s not already listed on most other CPA firm websites. I look for ways to be different in a way that sets me apart from other practitioners and gives my firm a point of valuable differentiation. I also look for ways to reconfigure my firm and my staff resources in ways that will allow us to scale quickly, maintain high customer service standards, and simultaneously tackle new challenges without breaks or bottlenecks in the system. I encourage my staff to think like entrepreneurs and bring me their “craziest” ideas to see if we can incubate them into something valuable. I don’t setup artificial boundaries that can’t be crossed and I’m perplexed when any of my staff seem to think they will rock the boat by bringing up an issue or idea that’s above their pay grade. I listen and tell them I’ll take all the help I can get.

[1] BS – Accountancy – Univ. of Illinois -Urbana, MS – Taxation, Univ. of Texas – Austin, Elijah Watt Sells National Silver Medal – May 1982 CPA Exam as my background is relevant to the discussion.

[2] The ability of “just about anyone to raise investment capital, and high-speed internet which “fuels” the virtual world and the ability to do anything, from anywhere, on any device cut the shackles that made my moving to physically be in New York in proximity to Wall St. and the investment banks to pursue my choice of career

[3] I have been fortunate to have had someone to fill that role for me even after thirty-eight years in professional practice.

StaffStaffMarch 21, 2019


Canopy Growth Corporation  (TSX: WEED) (NYSE: CGC)  has acquired American hemp company AgriNextUSA in a cash deal for an undisclosed amount.  The company did note that purchase was not material to its current cash position and that the transaction would speed up Canopy Growth’s entry into key markets in the United States.

AgriNext is a hemp enterprise led by CEO Geoff Whaling, that has been at the forefront of hemp advocacy and building a vibrant hemp sector in the USA.

The United States is the next stop on Canopy Growth’s desired path to becoming a leading, revenue-generating company focused on all aspects of cannabinoids and their potential,” said Bruce Linton, co-CEO and Chairman of Canopy Growth. “Our significant investments, acquisitions, and compilation of talented leaders such as Geoff will position us for swift expansion throughout the United States. By collaborating with a pioneer like Geoff, who has been involved with our team since our earliest days in 2013, we will aim to turn hemp supplied by American farmers into a wide range of products.”

Canopy Growth had previously announced that it was on track to build the first Hemp Industrial Park in the Southern Tier of New York State, after receiving a state license to produce and process hemp. At that time, the company said that it had committed to invest $100M to $150M into a hemp operation that would lead to significant job creation and positive local economic impacts, as well as the produce CBD products for Canopy.

The vision proposed by AgriNextUSA and supported by Canopy Growth would involve creating Hemp Industrial Parks such as the one planned in New York State, where this super crop could be fast-tracked through a production cycle that would result in commercial applications for all parts of the plant, from root to tip. Camopy said in its statement that American farmers will benefit from a model that provides a single, regional destination for their hemp crops and connects them with the researchers, entrepreneurs, and innovators whose ideas will turn their crops into new products and industries.

“Hemp has the potential to become a multibillion-dollar industry that will boost the American economy for generations to come,” said Geoff Whaling, CEO of AgriNextUSA, Chairman of the National Hemp Association and newly appointed Strategic Advisor, Hemp and CBD, Canopy Growth USA. “By working with Canopy Growth, we will turn our vision into a reality, one that helps American farmers, small and medium-sized business owners, and the next cohort of innovators who see the extraordinary potential that hemp has to offer.”

Some industry insiders believe that hemp will be an even bigger market than adult use or medical marijuana. They believe hemp has the potential to disrupt several prominent industries like advanced materials, cosmetics, energy, fiber and textiles, food and protein production and the health and wellness sectors. Hemp is also a natural source of CBD, the non-intoxicating component of cannabis that can be used for health and wellness purposes in jurisdictions where legally permitted.


StaffStaffMarch 21, 2019


Guest Post by Nicolas Chahine, InvestorPlace Contributor

We often hear jokes about the lofty valuations of cannabis stocks. They have huge market capitalizations with only a tiny fraction of them in actual revenues. Tilray Inc. (NASDAQ: TLRY) is perhaps the poster child for that joke since its short squeeze that occurred last September. Then Tilray stock skyrocketed to $300 per share in a day, but only to perhaps mark the absolute top forever.

First, let me assure you that I am not a perma-bull on pot stocks. Yes, I only trade them from the long side, but I use the technicals to guide my decisions. A few weeks ago, I shared a long entry opportunity in Tilray stock and it paid quickly.

On Monday, TLRY reported earnings and investors are happy with what they saw because TLRY stock was spiking on the headline. But in classic TLRY fashion, the knee jerk reaction was violent as the stock fell $5, then rallied at $4. 

The results were mixed as management beat the sales expectations but also reported some extra expenses. For now, this is something Wall Street should ignore for as long as TLRY is a growth stock.

If this were a mature company, then investors can demand tighter profit controls, but this is a situation where the cannabis companies are plowing into completely new territory so they deserve a lot of leeway, more so than usual in fact.

The cannabis industry is still in its infancy on Wall Street. Even the so-called experts rely more on hunches and guessing to forecast the fundamentals. So perhaps until there is enough history to establish tangible expectations, I greatly rely on the technicals to guide me. Charts don’t lie and they outline the trends and important levels.

However, relying on charts doesn’t mean I completely dismiss the importance of the company metrics. Perhaps the most important one that TLRY reported last night was that it sold 2,053 kilos, which is three times that of last year. This combined with a 110% increase in revenues for the same period, which tells me that the company is executing well on its growth plans.

TLRY’s Chief Executive Officer Brendan Kennedy explained away the margin pressures by highlighting the expansion of its facilities. The company added seven new facilities, so the ramp-up time will keep profitability at odds until the revenues catch up to the expenses. Overspending is the necessary evil that growth companies have to endure.

Meanwhile, they maintain a relatively healthy balance sheet with $500 million in cash. This will ensure that they are able to pursue their next focus areas in the U.S. and Europe. This is not only by targeting the recreational legalization trends, but this also includes making the CBD and medical applications.

Bottom Line on Tilray Stock

In short, the company is succeeding in its mission, so Tilray stock should have more upside potential in the long run. Those who want to bet on its success for years to come need not to worry about the minutia of action here. Moreover, they are not going at it alone. Management struck a partnership with Anheuser-Busch InBev (NYSE: BUD), which validates TLRY’s efforts in my opinion. If it’s good enough for a massive company like BUD, then it’s good enough for the general investor.

Meanwhile, for those who prefer to trade the stock short term instead, the technicals can definitely provide a road map.

Year-to-date, TLRY stock came into the earnings event only up 2.4% compared to the S&P 500’s 12% for the same period. Clearly, the stock is stuck below $80 per share since December. Even worse is how TLRY compares to Canopy Growth (NYSE: CGC), Cronos (NASDAQ: CRON) and Aurora Cannabis (NYSE: ACB), which are up 70%, 108% and 100%, respectively, for the same period.

The overnight bounce in Tilray stock brought it into potential resistance. The area around $76 to $78 per share has been pivotal for months. This usually creates resistance as both bulls and bears want to win the battle there. In January, the TLRY bulls were able to overcome it, but only for a few days. Unlike the stock market in general, TLRY has failed to recover the ledges from which they crashed into the Christmas correction.

Specifically, $77.50 is my area of interest. If they close TLRY above it and successfully retest it for footing, I’d consider it an opportunity to trade the upside potential to recover the January highs. But even then, there are areas of resistance here and at $82 per share. So I would need to see a clear breach of the first line of resistance before I chase it long.

As for support, the bears could get more of an upper hand if they can break through $70 per share. Oddly enough, Tilray stock retested its December lows just a few days ago. This is happening while the S&P 500 is still on a tear. The wound is still fresh. Below it, there is a trap door to the mid-fifties. This is not a forecast, but merely one of the available scenarios at hand.

It is best to wait for the break out from the zones noted before chasing either the upside or the downside potentials.

As of this writing Nicolas Chahine did not hold a position in any of the aforementioned securities.


StaffStaffMarch 21, 2019


Guest Post by James Brumley, InvestorPlace Feature Writer

Credibility. Without it, a growing company in a competitive arena is lost. With it, it can be a steamroller.

Not that Aurora Cannabis (NYSE: ACB) was lacking credibility, but now that it has activist investor Nelson Peltz on board as an advisor, the budding company has much more than it did. ACB stock jumped 14% last Wednesday, ultimately because the hedge fund manager will help Aurora speak with all the right people that can help take the organization to the proverbial next level.

Other reasons were cited for the big jump in Aurora Cannabis stock, and those weren’t necessarily wrong. But, it’s the sudden jolt of Peltz-related credibility that fueled the move.

And yes, for some investors who still weren’t quite convinced, this could be enough of a reason take a shot on Aurora Cannabis stock.

Missing Pieces

ACB has been something of an outlier among its pot peers, actually. Canopy Growth (NYSE: CGC) last year attracted Constellation Brands (NYSE: STZ) as a major stakeholder. Cronos Group (NYSE: CRON) is in bed with Altria Group (NYSE: MO) which now owns 45%. Aurora doesn’t have a major partner yet.

The reasons why aren’t exactly clear. The Canadian company has as much to offer an aspiring cannabis player as Cronos or Canopy Growth.

Those reasons, however, are also now irrelevant. Peltz has already dropped hints that he intends — as Aurora is tacitly hoping — to set up deals.

“I look forward to working with Terry (CEO Terry Booth) and the extended Aurora team to evaluate its many operational and strategic opportunities,” Peltz commented in the official statement, adding “including potential engagement with mature players in consumer and other market segments.”

Cowen analyst Vivien Azer agrees, writing of the news: “Peltz brings a network of relationships with large potential strategic companies that ACB could partner with across medical and consumer applications. In addition, we think ACB will be more patient in partnership selection than its peers, particularly regarding equity investment.”

Some investors are particularly celebrating the fact that Peltz brings a wealth of experience within the food and consumer goods segment.

Trian [Peltz’s hedge fund] has been involved with a number of consumer packaged goods companies such as PepsiCo (NASDAQ:PEP), Keurig Dr Pepper (NYSE:KDP), Procter & Gamble (NYSE:PG), Kraft Heinz (NYSE:KHC), Mondelez (NASDAQ:MDLZ), among others, noted GMP Securities consumer goods analyst Martin Landry, who upgraded ACB stock following the announcement. Landry goes on to explain: “We believe he could be instrumental in facilitating discussions with large consumer packaged goods companies.”

The two upsides are just the tangible manifestations of a much-bigger benefit Peltz brings to the table, however.

Credibility (and Motivation)

While Altria and Constellation are recognizable brand names, neither are established as dealmakers. Their interest in cannabis is largely self-serving, and their plans for their partnership are limited to the development of cannabis-based products.

Not so for Nelson Peltz and Aurora Cannabis. He’s a known dealmaker that some companies and many investors like to see get involved, especially when the potential value has been locked up for too long.

Peltz is also not limited to creating synergy between just two organizations. He’s willing and able to establish as many partnerships with as many entities as possible, without stirring up concerns that he may be building up his partners’ competitors as well. He will be doing that, but at least all partners know where they stand, and that Aurora is looking to become a supplier to multiple customers. There’s room for all of them, and Peltz will be able to make introductions ACB couldn’t on its own.

Perhaps more than anything else, however, Peltz wants the same thing existing Aurora Cannabis stockholders want — for the share price to rise. He’s being granted options for up to nearly 20 million shares of ACB stock at $7.74 a share, vested gradually over the next four years.

So, Peltz doesn’t make any real money unless the stock performs well.

Bottom Line for ACB Stock

Don’t misread the message. While this is certainly a big win for Aurora, the company remains a risky proposition for multiple reasons.

One of them is that cannabis remains illegal at the federal level in the United States despite widespread state-level legalization. Pot’s future, and the future of all its derivatives is still a bit dazed and confused.

There’s also the not-so-small reality that cannabis and now cannabis-based products are quickly becoming a commodity, which could crimp margins for the debt-laden Aurora.

Nevertheless, if Peltz can pull the right strings — and he’s certainly got strings to pull — the bullish case for Aurora Cannabis stock is bolstered. It’s not a reason in and of itself to buy the shares. But, for investors on the fence about stepping into a position, the hedge-fund player’s news may be even bigger than the market realizes.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.


StaffStaffMarch 20, 2019


It’s time for your Daily Hit of cannabis financial news for March 20, 2019.

On The Site

The Top 12 Cannabis MSO’s

Green Market Report has compiled a list of some of the largest MSO’s in the country. Many of the companies are in the middle of major acquisitions which haven’t technically closed, which makes ranking these companies difficult. These deals are being recognized for the most part and included in the company statistics. It’s also challenging to define which company is the largest as that depends on the metric being reviewed. Active states versus licensed states or operational dispensaries versus square footage of cultivation.


Curaleaf Holdings, Inc. (CSE: CURA) (OTC: CURLF) reported its financial and operating results for the fourth quarter and full year ended December 31, 2018 after the market close on Wednesday. The fourth quarter total revenue of $32 million increased 49% sequentially and 408% over the 2017 fourth quarter. Curaleaf delivered a net loss of $16.5 million, a steep drop from the previous quarter’s loss of $33 million, but the company reported a gain of $600k in the fourth quarter of 2017.

Canopy Growth

Canopy Growth Corporation (TSX: WEED) (NYSE: CGC) signed a multi-year processing and extraction agreement HollyWeed Manufacturing & Extracts Inc. HollyWeed NorthCannabis Inc. is the parent company of HollyWeed Manufacturing & Extracts Inc., which is a female-led, LGBTQ2-positive company based in British Columbia that operates several subsidiaries specializing in the growth, manufacturing, licensing, and production of cannabis and other pharmaceutical grade products.

In Other News

Vireo Health

Vireo Health International, Inc., a multi-state cannabis company, listed on the Canadian Securities Exchange under the stock symbol, VREO. Vireo Health becomes the first multi-state medical cannabis company to go public this year. The company has grown to over 250 employees, operates in six states and manages a rapidly expanding national footprint of manufacturing facilities and retail dispensaries that will total 11 states year’s end. Vireo Health is one of the only physician-founded, physician-led cannabis grower/processors in the country.


Greenlane Holdings, Inc., a leading distributor of premium vaporization products and consumption accessories, announced that it has publicly filed a registration statement on Form S-1 with the Securities and Exchange Commission related to a proposed initial public offering of Class A common stock. The number of shares to be offered and the price range for the proposed offering have not yet been determined. Greenlane has applied to list its Class A common stock on the Nasdaq Global Market under the symbol “GNLN.”

DionyMed Brands Inc. 

DionyMed Brands Inc.  (CSE: DYME) signed a binding term sheet with MM Esperanza 2 LLC, doing business as “MMAC,” to acquire select MMAC assets, including the 1.83 acre Los Angeles cannabis campus that includes a dispensary storefront, distribution facility, manufacturing hub and direct-to-consumer fulfillment center. The acquisition includes all property, leaseholds, equipment and licenses for a purchase price of $19 million and enhances DionyMed’s brands distribution and direct-to-consumer footprint in Southern California.


BANGI, Inc. (OTC: COBI), a diversified investment vehicle that acquires and leases specialized real estate assets, such as cannabis farms, announced that it expects its reporting status to be upgraded to “Current Information” on the OTC Pink Market, the highest level of the OTC Pink Market.  The Company expects to apply for a new ticker symbol with FINRA and corporate name change immediately following this expected upgrade.

Debra BorchardtDebra BorchardtMarch 20, 2019


Curaleaf Holdings, Inc. (CSE: CURA) (OTC: CURLF) reported its financial and operating results for the fourth quarter and full year ended December 31, 2018 after the market close on Wednesday. The fourth quarter total revenue of $32 million increased 49% sequentially and 408% over the 2017 fourth quarter. Curaleaf delivered a net loss of $16.5 million, a steep drop from the previous quarter’s loss of $33 million, but the company reported a gain of $600k in the fourth quarter of 2017. 

“2018 was a landmark year for Curaleaf. We successfully completed the largest ever U.S. cannabis RTO, experienced substantial growth, and have firmly set the foundation to capitalize on the shift in public sentiment toward cannabis in the U.S. and capture key expansion opportunities in 2019,” said Joseph Lusardi, Chief Executive Officer of Curaleaf. Lusardi continued, “Curaleaf has become the most accessible national cannabis brand with the largest operational branded dispensary footprint in the country and the recent launch of our CBD line under Curaleaf Hemp. We’ve done this through our strategic presence in highly populated, limited license states, which has served as an important foundation for our aggressive expansion plan across the country.”

Curaleaf opened seven new dispensaries during the quarter in key markets such as Florida and Arizona. 


The total revenue for the full year 2018 increased 298% to $77.1 million versus $19.3 million in the year ending 2017. Retail and wholesale revenue increased 514% to $57.5 million, compared to $9.4 million. 

Full-year 2018 managed revenue was $87.8 million, compared with $28.4 million in managed revenues for the full year 2017. The increase was primarily derived from organic growth in Florida, the opening of three dispensaries in New York and the acquisitions in Massachusetts in March and Arizona in April.

Gross profit before the impact of biological assets for the full year 2018 was $45.9 million, compared to $11.5 million for 2017, resulting in a gross margin of 60%. The significant increase was due to improved operating capacity of the Company’s cannabis business as acquisitions were integrated and new dispensaries opened. Gross profit on cannabis sales were $26.4 million for the full year 2018, resulting in a 46% margin, compared to $1.5 million in the full year 2017.

Financial Highlights

The company raised $400 million in a private placement offering and debuted as a public company on the Canadian Securities Exchange on October 29, 2018

Neil Davidson, Chief Financial Officer of Curaleaf, added, “Curaleaf’s rapidly growing footprint is a direct result of our strong capital position, scaled operations and ability to strategically acquire assets that augment our existing platform.”

Looking Ahead

Curaleaf reaffirmed its full-year 2019 outlook for managed revenue of $400 million and free cash flow of $100 million.  The company said it plans to continue to grow its operations via expansion in three dimensions: acquiring licenses in limited license markets, increasing presence in current markets, and increasing exposure in mass markets. The company expects acquisition-related costs, marketing and selling expenses, and capital expenditures to increase as it expands its presence in current markets and expands into new markets.




Debra BorchardtDebra BorchardtMarch 20, 2019


 Multi-State Operators Enjoy Significant Cannabis Market Advantages

Multi-state operators are cannabis companies that span across multiple legal cannabis states. They have many significant advantages over single-state operators within the cannabis industry. Multi-state operators own cultivation facilities, extraction/processing facilities, and cannabis retail venues in some of the most highly populated, affluent cities across the states that have legalized cannabis for medical or recreational use.

These entities are usually structured as holdings companies with separate state subsidiaries that hold state licenses for seed to sale activities. They are often a combination of joint ventures, management/ ownership agreements, and outright opened properties. These companies, while not permitted to bring cannabis and cannabis-derived products across state lines, but they can share intellectual property, equipment, branding, and employees across states.

Green Market Report has compiled a list of some of the largest MSO’s in the country. Many of the companies are in the middle of major acquisitions which haven’t technically closed, which makes ranking these companies difficult. These deals are being recognized for the most part and included in the company statistics. It’s also challenging to define which company is the largest as that depends on the metric being reviewed. Active states versus licensed states or operational dispensaries versus square footage of cultivation.

The valuations are based on figures from Yahoo! Finance.



Multi-State Operator Number of Operating States Number of facilities and/or licenses across states. Notes Valuation
Curaleaf (CURA.CN)


13 states, mostly in Florida 39 dispensaries, 12 cultivation sites, and 9 processing sites &

71 stores expected by 2020

$4 billion valuation
Acreage Holdings (ACRG.U)


12 states operational, 19 states licensed 68 retail dispensaries in 12 states, 21 cultivation licenses $1.9 billion valuation
Harvest Health & Recreation Inc.



16 states 70 dispensaries, 13 cultivation facilities, and 13 manufacturing in 2019. Licenses for 200 facilities, 123 retail locations. Harvest Health acquired Verano in $850m all-stock deal. $721 million valuation





12 states 78 licenses for retail locations, 30 operational stores, and 11 cultivation/manufacturing licenses $1.8 billion valuation



11 states 56 retail locations and 14 cultivation and processing facilities. The company acquired MPX Bioceuticals in $835 million deal. $1 billion valuation
Grassroots 11 states 15 dispensaries under operation, 62 licenses. The company has raised $165 million.  Private
Green Thumb Industries



10 states Licenses for 71 retail locations, 11 manufacturing facilities. Acquired Beboe Brands recently $2.8 billion
Cresco Labs



7 states 16 retail locations and 10 production facilities $200 million valuation
Golden Leaf



3 states 7 retail locations, 3 cultivation facilities. Terminated Terra Tech merger $59 million valuation
4Front Ventures 5 states 5 dispensaries with plans to expand to 7. Merging with Cannex Capital (CNNX) $300 million (est.)


2 states 6 operational dispensaries, licensed for an additional 2 stores.  5 cultivation facilities $100 million valuation



2 states 25 dispensaries in Florida, 1 in California and Massachusetts is said to be soon. 2 cultivation facilities  $1.3 billion valuation


Curaleaf is the largest based on valuation. Acreage Holdings is the largest with regards to the number of states it has licenses with. MedMen has the most retail licenses at this time, but Harvest Health has the most open dispensaries at this time. Licenses though aren’t a guarantee that an actual business will open.

MSO Advantages

Advantages for multi-state operators include the ability to react to market trends, avoiding and mitigating problems based on experiences from other states and developing brand recognition at the national level. The most significant advantage is in acquiring state licenses due to having already established licenses and standard operating procedures. States like to see companies that look experienced and have a track record of following compliance requirements. Thus, big established companies have a leg up on local small players when it comes time to award licenses.

However, all this expansion comes at a cost. Seaport Global Securities analyst Brett Hundley wrote, “Most MSOs are operating in the red today while having to access capital on secondary OTC or Canadian stock exchanges.”  He went on to say, “All of the U.S. MSOs have been running around grabbing the best real estate in the U.S., setting up vertical operations state-by-state and cornering the market!” Hundley recently initiated coverage on the group and he had more buy ratings than neutral. He wrote, “We see two large U.S. market opportunities coming into play, with the dispensary recreational market potentially being worth $36B and the medical/ingredient market potentially being worth $58B.”

Investor Checklist

Green Market Report talked to attorney and investment specialist, and author of The Green Regulatory Arbitrage: A Case For Investing In U.S. Multi-state Vertically-Integrated Cannabis Companies David Wenger about investing in multi-state operators.

“The investor should have a second look at those multi-state plant touching companies,” says Wenger, “That’s where a lot of the value is going to be added and driven from in this industry because everyone else is trying to get a piece of that pie that is being basically earned at dispensaries.”

“I’m very positive overall about the multi-state model but especially in the limited license restricted states, but I caution investors,” explains Wegner, “Especially over the last few weeks we’ve seen certain players come to the market say that they’re multiple-state operators and what they are is just an investment fund that holds minority holdings in multiple states. I just caution people to do further digging to make sure you investigate things from multiple sources and make sure that they’re corroborating what you’re hearing from the company.”

Indeed, things can get complicated within multi-state operators; Many acquisitions get announced with great fanfare, but then if the deal goes cold, it is usually quietly brushed under the rug. The cannabis industry is becoming famous for its whirlwind marriages and shotgun divorces. Look for the announcement that says a proposed acquisition actually closed.

Another thing that can be confusing to investors who are trying to make investment decisions is the high expense levels for the MSO’s at this time. Many of these companies are in the empire building stage and that can be very expensive. Plus due to onerous rules and regulations, cannabis businesses can often take months to generate revenue as the companies wind their way through various hurdles.

“It takes money to make money,” said Acreage Holdings Inc. (ACRG.U) President George Allen. He noted that the company is deep in the process of expansion and that doesn’t come cheaply. However, a successful MSO will be one that spends its money wisely. Acreage recently acquired the California dispensary Kanna for $11.5 million, but Allen said that a similar business located not very far away had a price tag that was several times that amount. So while the company wants to grow it will only do so if the price is right.

The Membership of Net Losses

“There’s always strength in size, but that doesn’t always mean they are profitable,” said Gary Rosen of Marcum Advisors.” Right now, that is certainly the case. Most of the MSO’s are reporting net losses. Normally that would cause an investor to worry, but at this stage, the cannabis industry is an emerging one. These companies are spending a lot to get established. Acquiring licenses, setting up cultivation facilities and even making the right hires are all expensive steps.

It may be months, if not years before MSO’s can be analyzed in the way of quarterly comparisons since each quarter is vastly different from the preceding one. However, if some MSO’s continue their high cash burn rates before the revenue can catch up, they will be forced to either raise more money, sell off assets or begin layoffs. After only 12 weeks of business, Cannabis NB was forced to lay off 60 employees. Demand for the product wasn’t the issue, but a lost crop and a lack of proper licensing sent the company into a fast downward spiral.

The Big Get Bigger

There were protests recently at the SXSW festival in Austin, Texas against “corporate cannabis” as small operators are increasingly forced out of the industry.  They don’ have the deep pockets to weather the long runway to profitability that the larger companies have. The larger MSO’s can afford high tech solutions and the latest software to analyze sales and inventory data. They can afford the latest technology in cultivation processes. Small single state businesses are finding it harder to compete and even harder to decline acquisition offers in the millions.

The MSO’s believe that when the country fully legalizes, a national footprint will be the key to becoming an industry leader. The small operator may not survive in the short term. It could follow the pattern of the beer industry, which was initially known for local beers and breweries. Then for years, major brands were the only beers for sale. It’s only been within the last 10 years that craft beers have made a comeback. Craft cannabis will have to fight to hold its place against corporate cannabis.

About Us

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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