Business Archives - Green Market Report

Kaitlin DomangueKaitlin DomangueNovember 19, 2019
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3min270

Canadian cannabis producer Hexo Corp. (HEXO) has admitted to unknowingly growing cannabis in an unlicensed area of its Niagra facility. 

The company put out a press release on Friday saying that a section of the facility found to be growing cannabis was not properly licensed to do so. The unlicensed section is referred to as “Block B” and was acquired from Newstrike Brands earlier this year. 

On July 30th, shortly after the acquisition closed, is when Hexo said they discovered the unlicensed growing taking place. Hexo explained that when UP Cannabis received its cultivation license for Niagra, it was under the impression that Block B was included in the license. Hexo’s facility, including Block B, was even inspected by Health Canada in February 2019 and no concerns were raised about unlicensed growing within the facility. Only upon acquisition did Hexo learn that Block B was not licensed to grow cannabis. 

Hexo CEO and co-founder, Sebastien St-Louis, said “Upon discovering that cannabis was being grown in an inadequately licensed area of the Niagara facility we immediately ceased all activities and notified Health Canada. While we are disappointed with what we uncovered, we assume responsibility for any issues with UP products prior to the acquisition.” Health Canada says they are satisfied with how the company handled the situation. 

Earlier this year another Canadian cannabis company, CannTrust, came under fire for unlicensed growing operations. However, these two situations are vastly different as evidence shows that CannTrust knew about their unlicensed growing, yet did nothing to stop it. In fact, emails showed the company’s compliance officer saying they “dodged some bullets” after an inspection at the facility failed to uncover the unlicensed growing taking place. CannTrust also had to destroy $77 million worth of unregulated plants and they fired its CEO. On the other hand, Hexo seems to be handling the entire situation honorably. 

The market is also seeming to make this distinction, while the stock fell on Friday and Monday, it was trading higher on Tuesday. The stock was lately trading at $1.74.

Sebastien St-Louis says that “Hexo is keenly focused on producing high-quality products that Canadians can trust.” The company says there are no current operations happening at the Niagara facility and UP Cannabis cultivation has been moved to their other locations. This is not due to the recent events. but an overall operations move. 


Kaitlin DomangueKaitlin DomangueNovember 19, 2019
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3min310

Canadian cannabis producer Canopy Growth (NYSE: CGC) is set to receive a large tax break for their new Kirkwood, New York facility. An economic development group, The Broome Industrial Development Agency, set a plan into motion on behalf of Canopy Growth. Canopy will receive a standard 15-year payment-in-lieu-of-taxes deal, qualifying for a 39% reduction in property taxes for the first five years of the agreement. When all is said and done, their tax break will equate to $1.7 million.

According to the Binghamton Press, starting in 2020 and until 2024, Canopy will pay $192,000 in property tax payments versus a full tax bill of $312,000. From 2025 through 2029, the payments will be $252,000. Beginning in 2030 through 2034, the company will pay $282,000.

Canopy Growth began work on the 308,000 square-foot facilities in July. They purchased the facility from vacuum cleaner manufacturer Shop-Vac for $9.5 million and expect to invest more than $100 million in renovations. According to the company, there are a substantial amount of renovations needing to take place and its completion may take longer than anticipated. Canopy Growth told the IDA board they plan to extract and process hemp into CBD oils, topicals and consumables, initially starting with a vape and gummy line. The company plans to employ up to 75 people within three years and they want to pay the bulk of their employees between $30,000 and $50,000 annually. Canopy Growth says they will open hemp processing facilities in seven U.S. states next year.

The tax break request comes at a stressful time for Canopy Growth. The company, the largest in terms of the value of all marijuana-related publicly traded companies, has yet to post a profit. They reported a quarterly loss of over $117 million and they also failed to meet their revenue expectations. Canopy Growth’s stock is suffering alongside their loss, falling more than 70% since peaking last April. In trading on Thursday, it slumped 14% on the day to $15.83.

Go Farm Hemp filed a $1.9 million lawsuit last month against Canopy Growth with regards to the New York farm. Canopy paid the deposit for the agreement and two installments but failed to pay the third installment that was due August 15, 2019. Canopy was accused interfering with Go Farm’s performance by “threatening seizure of Go Farm’s crops and property without any right or authority” according to the lawsuit.

 

 

 


StaffStaffNovember 19, 2019
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10min270

Minority Cannabis Business Association and Merida Capital Partners announced the winning recipients of investment through the Inclusive Industry (“i2”) Accelerator, which will deploy $500K initially to fast-track the development of five minority-owned businesses. MCBA and Merida launched i2 earlier this year to accelerate the development of minority-owned businesses in the cannabis and hemp industry by creating a meaningful executive mentorship program for underserved communities that could increase diversity and inclusiveness in key networks within the cannabis ecosystem and develop an infrastructure for entrepreneurs seeking capital.

“Our i2 Accelerator with Merida is a historic step towards creating a diverse, representative cannabis and hemp industry,” said MCBA President Jason Ortiz. “People of color have suffered from disproportionate enforcement of cannabis laws and have high barriers to entry and success in the hemp and cannabis industries. i2 provides companies with rigorous executive mentorship and critical resources to place them in the best possible position to successfully scale their enterprises and remove those barriers.”

“We are so proud to support these meritorious businesses and begin a sustained effort to close the inclusion gap for aspiring cannabis entrepreneurs in disadvantaged communities. The quality and number of applicants gave us confidence that this program will create incredible value for minority operators, investors and the industry at large, motivating us to significantly increase our target investment amount, so not one, but five minority-owned businesses could participate in the i2 Accelerator in this first round,” said Merida Capital Partners Managing Partner Mitch Baruchowitz.

The recipients:

Vega Holdings; Meriden, CT; $150K Investment: Vega Holdings is the only Latino-owned holder of a Connecticut pilot hemp license, operating in Meriden, Connecticut, with indoor and outdoor facilities that produce high-quality CBD and biomass. Luis Vega, a seasoned farmer and grower with an MBA and experience in the hospitality industry, returned to his family’s roots in farming to found Vega Holdings and will use his investment to significantly scale his existing hemp farming operation and product manufacturing.

High Road; Washington, D.C.; $100K Investment: High Road is an app-driven delivery platform that provides patients and consumers with access to licensed cannabis products through safe, convenient and compliant delivery services. The integrated, on-demand software company was founded by Jennifer Snowden, a former real estate and interior design executive turned entrepreneur. In addition to advocating for expungement and smart policy reforms, High Road hires and trains those convicted of nonviolent cannabis offenses. i2’s investment, business mentorship, networks and tools will help High Road expand its platform capabilities and propel its first mover advantage in East Coast markets.

Higher Learning Institutions; Pontiac, MI; $100K Investment: Higher Learning Institutions is a state-licensed vocational school with a cultivation and extraction lab and partnership with a major university that offers affordable, hands-on job training, educational certificates, career development, internships, free monthly seminars and job opportunities and placements in the cannabis industry. After researching the medicinal benefits of cannabis for his grandmother and taking a course at Oaksterdam University and consulting for cultivation facilities, Founder Sammie Rogers realized there were no institutions focused on assisting underserved communities with affordable career development, job training and placements in the cannabis industry. With Merida’s presence in the fast-growing Michigan market, the capital investment will help launch the school, broaden its inclusiveness efforts and close important educational and resource gaps in the cannabis sector.

James Henry; Oakland, CA; $100K Investment: In 2017, James Victor and John Alston cofounded James Henry, a minority- and veteran-owned lifestyle, health and wellness cannabis brand with licenses in manufacturing, distribution and retail delivery and a 1,700 sq. ft., green-zone facility in Oakland. With proprietary formulations developed by medical doctors, scientists and extraction experts to manage pain and other conditions, the company is committed to helping the U.S. address its opioids crisis through the promotion of responsible cannabis products for medicinal purposes, therapeutic assistance and lifestyle situations. James and John have incorporated original art and social equity as part of their brand ethos, infusing a balance of wellness and culture for consumers.

Canna Bistro; Atlanta, GA; $50K Investment: Canna Bistro offers CBD-infused foods out of a members café in Atlanta’s Historic West End. The company was founded in 2018 by Chef Swan Simpson, a self-trained vegan/vegetarian chef, who spent more than three decades perfecting plant-based, infused recipes and proprietary formulations. Initially, Chef Swan started selling $5 smoothies at pop-up retail locations across Atlanta, parlaying her loyal customer base into the first-all-CBD-infusion eatery in the southeastern U.S. In addition to incredible food Chef Simpson serves up, Canna Bistro promotes the hiring of individuals with non-violent, criminal records, along with business opportunities for previously incarcerated women and social good efforts in under-served areas.

 


StaffStaffNovember 19, 2019
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3min430

The Flowr Corporation

The Flowr Corporation (TSXV: FLWR)(OTC: FLWPF) reported that it has closed its previously announced credit facility from a syndicate of lenders led by ATB Financial and including Farm Credit Canada. The $25 million facilities consist of a $24.5 million recapitalization term facility and a $500,000 revolving operating credit facility. Flowr will receive the first tranche of funding of approximately $20.05 million on closing with the remaining of the recapitalization term facility available subject to certain conditions.

“We are extremely pleased to strengthen our financial position through non-dilutive financing at attractive pricing,” commented Vinay Tolia, Flowr’s Chief Executive Officer.  “The reduced size of the ATB Credit Facilities compared to the initial commitment reflects our reduced capital needs as we focused on those investments with the greatest potential to generate cash flow in the near term.  With our third-quarter earnings release on November 26, 2019, we will provide our shareholders with a comprehensive business update.”

The company said it would release its third-quarter 2019 results after the close of the financial markets on Tuesday, November 26, 2019, which will be followed by a conference call and webcast to review these results at 5:30 p.m. Eastern Time.

Meta Growth

National Access Cannabis Corp (TSXV: META) d/b/a Meta Growth said that it has reached a new agreement to extend its $9,000,000 loan from Opaskwayak Cree Nation to December 31, 2022.

The original loan was set to mature on December 14, 2019.  As one of META’s largest shareholders, owning approximately 10.8 million shares, OCN has agreed to extend the maturity of the Loan until December 31, 2022, at an interest rate of 10% per annum, and an annual administration fee of $225,000.

“OCN sees the ongoing investment into META as a growth opportunity for both META and OCN.  The income that OCN generates from the interest on the Loan helps OCN with investing in our community infrastructure, such as housing,” said Christian Sinclair, Onekanew (Leader) of OCN and Board Member of META. “We hope to continue to capitalize on opportunities with META as the Ontario government is anticipated to issue additional licenses for cannabis retail locations.”


Debra BorchardtDebra BorchardtNovember 19, 2019
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3min440

Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF) released its financial results for the third quarter of 2019 ending September 30, 2019, with revenue of $70.7 million, an increase of 22% sequentially and an increase of 150% yearo-over-year. This beat analyst estimates by $5.09M.

The company also delivered a net income of $60.3 million for the quarter, which was higher than the second quarter’s net income of $57.5 million.

“Our third-quarter results reflect our continued customer loyalty, growth, and leadership position. Trulieve’s strong brand, wide-ranging access to stores, and authentic customer experience have resonated with our customers and patients,” stated Kim Rivers, Trulieve CEO. “The third quarter was also successful in further strengthening our position in our existing markets as well as preparing for new market entry. We continue to build operational efficiencies and financial discipline to ensure a solid foundation, cash reserves, and the right tools at our disposal to expand our footprint. Looking ahead, this is an exciting time as we execute on our strategic vision to be one of the top-performing cannabis companies in North America.”

Adjusted EBITDA increased from $31.6 million in Q2 2019 to $36.9 million at September 30, 2019.

The company also stated that gross profits after net gains on biological asset transformation for the quarter was $110.1 million, up $74.3 million or 208%, from $35.8 million for 2018 for the same time period. “This increase was driven by an increased gain on biological assets and increased retail sales. Additionally, because the corporation was growing more plants as of September 30, 2019 than it was as of September 30, 2018, there are more plants undergoing transformation and therefore more gain.”

Expenses Increase As More Locations Open

Total expenses for the three months ended September 30, 2019, was $20.6 million, an increase of $12.3 million or
147%, from $8.3 million for the three months ended September 30, 2018, which is mainly due to scaling of
the business.

Trulieve said the increase in total expenses was due to an increase of retail, sales and marketing expenses
which for the quarter which was $14.7 million, up to $8.2 million or 125%, from $6.5 million for 2018. Retail, sales and marketing expenses as a percentage of revenue were 21% for the quarter, as compared to 23% for the quarter 2018. “The overall increase in retail, sales and marketing expenses was due to the opening of additional dispensary locations and the associated costs including payroll and insurance.”

The stock was lately trading at $11.30, above its 52-week low of $6.68, but below its year high of $16.23.

 


StaffStaffNovember 19, 2019
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5min440

Full birth name: Diana Anglin

 

Title: Chief Operating Officer

 

Company: CannAmerica Brands Corp.

 

Years at current company: 1.5 years

 

Education profile: BS from Western Michigan University (1994)

 

Most successful professional accomplishment before cannabis: Previous to cannabis I was in the public higher education sector. I had plenty of experience interpreting rules for higher education like Title IV (federal financial aid), NCAA (National Collegiate Athletic Association), and college accreditation standards. While serving as the Graduation Services Advisors for the Colorado School of Mines I was able to motivate many students burned out from the rigorous program to stay focused and finish their degree. It brought me heartwarming pride to see “my students” walk across the stage at graduation.

 Company Mission: Our mission is to maximize the value of our brands by promoting, marketing and licensing the brands through various distribution channels, including to dispensaries, wholesalers and distributors in the United States and internationally. CannAmerica Brands owns a portfolio of cannabis brands in the cannabis space currently in the states of Colorado, Nevada, Maryland, Oklahoma, and Massachusetts. Our core strategy is to enhance and monetize the global reach of our existing brands, and to pursue additional strategic acquisitions to grow the scope of and diversify our portfolio of brands.

 Company’s most successful achievement:

Creating our Intellectual Property company to protect what our founders spent years creating was an early industry achievement that put our Company ahead of other cannabis companies. CannAmerica achieved a major milestone when we began trading on the Canadian Securities Exchange (“CSE”) under the symbol “CANA” on October 15th of 2018, when Canada announced federal legalization of cannabis. In December, CannAmerica also commenced trading on the OTCQB® Venture Market in the United States under the symbol “CNNXF.”

 Has the company raised any capital (yes or no): if so, how much?:

Yes, CannAmerica raised approximately $7 million via non-brokered private placements.

 Any plans on raising capital in the future?

At this time, the Company is focused on operational success.  Once current plans for expansion and new lines of products are in place, the Board will review the market temperature to determine the course of action for financing additional projects.

 

Most important company 5-year goal:

Expansion into more legal cannabis marketplaces, national hemp finished product sales, and additional lines of business to increase the revenues for the company and to create as many opportunities for brand expansion and acquisition.

Diana Anglin Bio:

Diana Anglin is a leader in cannabis regulatory compliance in the state of Colorado. She has assisted many companies to obtain licensing and prepare for opening of business. She served as Chair for Compliance Council of the Colorado Cannabis Chamber of Commerce and held the position of Director of Compliance for two licensed marijuana companies. Currently she is the Chief Operating Officer for CannAmerica Brands Corp. Diana has been working in regulatory compliance for over 20 years. Her career started with helping young people navigate the college regulatory processes of Student Financial Aid, Graduation Services, and Enrollment Management.

Diana enjoys using her unusual sense of humor to raise money for local charities as well as using her free time to enjoy the many activities Colorado has to offer.

 

 


StaffStaffNovember 18, 2019
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9min1160

It’s time for your Daily Hit of cannabis financial news for November 18, 2019.

On The Site

MedMen

MedMen Enterprises Inc. (MMEN.CN) (MMNFF) claimed to be the unicorn of marijuana companies when the California-based business went public in May of 2018. Now just 18 months later, it has a market cap of $170 million, according to Yahoo Finance, and is being forced to dramatically curtail its plans.

On Friday, the company said it was taking several steps to achieve profitability including laying off of 190 employees or 20% of its workforce, cutting back on store openings and selling assets.

In addition to the employee layoffs, which the company said would save $10 million, MedMen is also selling its interest in Treehouse REIT for net proceeds of $14 million. So far, its gotten $7 million and has agreements to sell the remainder. 

Sunniva

Sunniva Inc. (OTC: SNNVF) stock plunged over 40%  to lately trade at 45 cents after the company announced that President Kevin Wilkerson would resign. This comes just one week after the company’s Chief Financial Officer also resigned.

Wilkerson also resigned from his position as President and Chief Executive Officer of Sun CA Holdings effective December 2. The company said the resignation was for personal reasons and a replacement has not been named. It follows last week’s announcement that CFO Dave Lyle was resigning, also for personal reasons, and David Weinmann has been appointed interim CFO. In addition to that, Michael Barker who was on the board of directors also resigned.

Acreage Holdings

Acreage Holdings, Inc. (“Acreage”) (CSE: ACRG.U) (OTC: ACRGF) is buying New Jersey’s  Compassionate Care Foundation, Inc. which is a vertically integrated cannabis nonprofit corporation. The deal is subject to state approval and the amount of the deal was not disclosed. However, the state of New Jersey did state that Compassionate Care reported $4.9 million in revenue in 2018, badly trailing Curaleaf’s $19 million in revenue for 2018.

The Biennial report also stated that when looking at total inventory, neither Greenleaf Compassion Center nor Compassionate Care Foundation eclipsed 200 lbs of total product from June to December of 2018. “During the study period, Compassionate Care Foundation had a range of between 12 and 102 lbs of product onhand and an average of 41 lbs, while Greenleaf had a range between 5 and 12 lbs of product on hand and an average of 8 lbs on-hand.

In Other News

Ayr

Ayr Strategies Inc. (CSE: AYR.A)(OTCQX: AYRSF) is reporting financial results for the three and nine months ended September 30, 2019. Total revenue increased 19% to $32.1 million compared to $26.9 million. Loss from operations was $10.7 million compared to $20.1 million. Adjusted EBITDA increased 16% to $8.7 million compared to $7.5 million.

“We are extremely pleased with how well our business is executing after just four months of combined operations,” said Jonathan Sandelman, CEO of Ayr. “In that brief time, we have made considerable progress on key initiatives in both the Western and Eastern U.S. – organic growth has exceeded our expectations, our retail stores are among the most productive in the industry, and our wholesale business has become a substantial contributor to the top and bottom line.

“In Nevada, we continued to generate margin improvements from vertical integration of the four companies we acquired. In fact, our dispensaries are now sourcing even more products internally than they were just a few months ago, and our cultivation expansion in Nevada remains on track for completion in the first half of 2020.  In Massachusetts, our wholesale business continued to gain momentum during the quarter as our monthly revenue has nearly tripled since closing our qualifying transaction in May.

Cannabis Sativa

Cannabis Sativa, Inc. (OTCQB:CBDS) reported earnings for the quarter ending September 30, 2019 year-to-date results and certain comparisons to the same period in 2018.

For the nine-month period ended September 30, 2019, revenue increased 72%, to $705k, from a year ago while gross margin improved 71% from the comparable 2018 period ($413k vs. $241k), at 59% of revenue. PrestoDoctor’s patient growth and geographic expansion were the primary drivers for the improved revenue and margins. Operating loss for the nine months ended 9.30.19 was $1.7 million, an improvement of $1.4 million (42%) from the same period in the prior year. The Company continues to see benefits of its aggressive cost control program, implemented two years ago. Operating costs (SG&A) are down 36% from YTD Q3 2018, and down 66% from YTD Q3 2017, primarily due to lower professional and consulting fees.

Freedom Leaf

Freedom Leaf, Inc.  (OTCQB: FRLF), a first in class hemp consumer packaged goods company that recently acquired Green Lotus™ to build its position as a leading provider of natural cannabinoid-rich hemp products, announced today that it closed a $5 million convertible note financing led by an affiliate of Merida Capital. David Goldburg, Chairman of the Board, and Dave Vautrin, Independent Director, invested $125,000 and $67,000, respectively, in the convertible note financing. Proceeds from the financing will primarily support the Company’s production, marketing, and sales efforts as it continues to build its position as a leading CBD and hemp company servicing the North American and Mexican markets.

One World Pharma

One World Pharma Inc. (OTC: OWPC), “OWP,” a fully licensed pure-play cannabis and hemp ingredient producer in Colombia, is pleased to announce that its common stock has been uplisted to the OTCQB platform, effective immediately.

Acceptance to the OTCQB will increase liquidity in the Company’s common stock and provide shareholders with greater access to the majority of broker-dealers who trade stocks on the OTCQB. Historically, ascension to the OTCQB has often been met with enhanced liquidity and visibility. The OTCQB is a venture market designed for early-stage and developing U.S. and international companies.

“We are most pleased to have reached this milestone and to have been accepted to trade on the OTCQB platform,” said Craig Ellins, Chief Executive Officer, One World Pharma. “Uplisting to the OTCQB allows us to have our corporate successes potentially recognized by a far greater constituency of brokers, analysts and individual investors and ultimately seek a listing on a major exchange.”


Debra BorchardtDebra BorchardtNovember 18, 2019
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3min2680

Sunniva Inc. (OTC: SNNVF) stock plunged over 40%  to lately trade at 45 cents after the company announced that President Kevin Wilkerson would resign. This comes just one week after the company’s Chief Financial Officer also resigned.

Wilkerson also resigned from his position as President and Chief Executive Officer of Sun CA Holdings effective December 2. The company said the resignation was for personal reasons and a replacement has not been named. It follows last week’s announcement that CFO Dave Lyle was resigning, also for personal reasons, and David Weinmann has been appointed interim CFO. In addition to that, Michael Barker who was on the board of directors also resigned.

It was reported that the short interest in the company stock jumped 388% in November, This despite a glowing video on Midas Letter a few weeks ago and news that the company closed on a private placement for $7.5 million.

On November 4, Sunniva said released word that it still planned to work with CannaPharmRx with respect to the sale of Sunniva Medical Inc., yet gave no information as to the need for making such a pronouncement.
In October, Sunniva said it was amending the terms of the performance warrants that had been issued in conjunction with the acquisition of LTYR Logistics. The original milestone had been the opening of a distribution center in Long Beach, CA. That was changed to the opening of a distribution business in Coachella, CA. That meant the warrants would convert to shares immediately and Wilkerson’s 239,491 warrant shares would become performance shares.

Last quarter the company reported revenue of C$5.3 million, but net losses of C$14.9 million.

In April, Sunniva said it planned to focus primarily on the ongoing development of our California assets and brands in California. In a statement, the company noted, “In Canada, we continue to expand our Natural Health Services operations with new leadership from Dr. Mark Kimmins. We have suspended operations on our Okanagan Falls property (the “Sunniva Canada Campus”) as we focus efforts on US operations, and we continue to review strategic initiatives in respect of our Canadian assets.”


Debra BorchardtDebra BorchardtNovember 18, 2019
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4min1900

Acreage Holdings, Inc. (“Acreage”) (CSE: ACRG.U) (OTC: ACRGF) is buying New Jersey’s  Compassionate Care Foundation, Inc. which is a vertically integrated cannabis nonprofit corporation. The deal is subject to state approval and the amount of the deal was not disclosed. However, the state of New Jersey did state that Compassionate Care reported $4.9 million in revenue in 2018, badly trailing Curaleaf’s $19 million in revenue for 2018.

“I’m thrilled to finally welcome CCF into the Acreage family,” said Kevin Murphy, Chairman and Chief Executive Officer of Acreage.  “This reorganization will result in increased access to affordable medical cannabis for New Jersey’s existing patients in short order.  Moreover, we have long believed that upon adult-use legalization, the New England and Mid-Atlantic regions will be the preeminent cannabis market in the U.S. and Acreage is best positioned of any U.S. cannabis company to benefit.”

New Jersey Needs More Dispensaries

The Biennial Report issued in April 2019 from the state of New Jersey said, “The Department estimates that in 3 years New Jersey will need between 440,000 and 1,000,000 square feet of licensed cultivation capacity to meet
growing demand – or between 25 and 50 cultivation sites, depending on average size of site.” It went on to say, ” In New Jersey, there are 1.5 million people per open dispensary, whereas the aggregate average of population per dispensary in other states was roughly 100,000 people per dispensary. If New Jersey was at the average, the state would have 90 medical dispensaries to serve our population. Conclusion: The analysis strongly supports the need for additional dispensary sites in New Jersey.”

The report also noted that in both 2017 and 2018, Compassionate Care Foundation had the highest medical cannabis discounts, with discounts averaging between 16% and 17% per ounce.

CCF Assets

According to the company statement, Compassionate Care has licenses for cultivation, manufacturing & processing, and three retail dispensaries.

Cultivation: CCF operates one of New Jersey’s largest indoor growing facilities, primarily for high end flower, in Egg Harbor, NJ.  Acreage and CCF are planning to expand this facility to serve the existing demand for medical cannabis and in anticipation of adult-use legalization, and to build out a robust wholesale business.

Retail Dispensary Operations: CCF has the potential to operate three retail dispensaries, one of which is currently in operation in Egg Harbor.  An additional dispensary is under construction in Atlantic City as The Botanist, and an letter of intent has been signed for another The Botanist dispensary in Williamstown, NJ.

CCF Trails Competition

The Biennial report also stated that when looking at total inventory, neither Greenleaf Compassion Center nor Compassionate Care Foundation eclipsed 200 lbs of total product from June to December of 2018. “During the study period, Compassionate Care Foundation had a range of between 12 and 102 lbs of product onhand and an average of 41 lbs, while Greenleaf had a range between 5 and 12 lbs of product on hand and an average of 8 lbs on-hand.
Every other ATC in New Jersey had an average inventory of close to or over 500 lbs during same time period.”

 


Debra BorchardtDebra BorchardtNovember 18, 2019
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5min2190

MedMen Enterprises Inc. (MMEN.CN) (MMNFF) claimed to be the unicorn of marijuana companies when the California-based business went public in May of 2018. Now just 18 months later, it has a market cap of $170 million, according to Yahoo Finance, and is being forced to dramatically curtail its plans.

On Friday, the company said it was taking several steps to achieve profitability including laying off of 190 employees or 20% of its workforce, cutting back on store openings and selling assets.

Cowen & Co senior analyst Vivien Azer wrote, “While MMEN has established leading brand equity in California, it has come at a significant cost. The announced changes are clearly necessary if MMEN aims to remain a going concern, in particular in a capital constrained environment. That said, the magnitude of the change, for an organization that has experienced an unusually high amount of turnover in senior leadership, will present challenges from an execution standpoint. Maintain Underperform.”

Layoffs

“We have a clear plan to increase our market share, while at the same time enhancing our margins and reducing our corporate overhead,” said Adam Bierman, MedMen co-founder, and chief executive officer. “We must unlock our operating leverage and bring the company to positive EBITDA. Given market conditions, capital allocation is more critical than ever. As such, we announced a layoff of over 190 MedMen employees.”

Market watchers may recall that when the company went public, Bierman and his partner Andrew Modlin were criticized for the amount of money they were paying themselves. In subsequent quarters, analysts pointed to the company’s extremely high expenses, but Bierman would explain it away as the cost of building a new company.

Bierman added, “This layoff includes many hard-working, mission-based people whose presence will be sorely missed. While it is never easy to let employees go from the MedMen Family, we believe this decision is in the best interest of our company as we position ourselves for growth in the years ahead.” No doubt those laid off employees will be thinking about the mansion Modlin just acquired for $11 million in July.

The company also said it was consolidating its offices, which would foster team building as well as saving money. The remaining employees will have a share-based reward program based on the company meeting certain targets. MedMen also noted that it will trim too many layers of overlapping jobs.

In addition to the employee layoffs, which the company said would save $10 million, MedMen is also selling its interest in Treehouse REIT for net proceeds of $14 million. So far, its gotten $7 million and has agreements to sell the remainder. Treehouse was buying the MedMen properties and then MedMen was leasing them back, an option that has increased within the industry as cannabis companies monetize their properties as financing has gotten more expensive.

MedMen had been on an aggressive expansion plan as it spent millions on dispensaries and licenses in a quest to be one of the largest multi-state operators. Now the company is saying it will cut back on store openings in 2020 and only open a dispensary that will make over $10 million in the first 12 months. It will delay further spending in New York in Arizona.

Selling Assets

The company has hired Canaccord Genuity to “explore strategic alternatives for certain operations and licenses in states that are currently deemed not critical to the Company’s retail footprint.” It has also sold other investments in various brands and has netted $8 million so far.

Cutting Expenses

Not only is the company laying off employees, but it is also cutting back on its marketing and technology budgets in order to save $20 million. In other words, don’t expect any more Spike Jonze videos. MedMen said it thinks it can save $2 million by renegotiating insurance policies and outsourcing human resources.

The stock was lately trading at 98 cents, down from its 52-week high of $4.19. Cowen & Co. has a target price of 85 cents.

 



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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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