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StaffStaffApril 13, 2021
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6min2650

It’s time for your Daily Hit of cannabis financial news for April 13, 2021.

On The Site

Organigram

Organigram Holdings Inc. (NASDAQ: OGI) shares were falling over 9% in early trading after the company reported that its revenue fell in the second fiscal quarter of 2021 and then et losses ballooned. Organigram reported revenue for the second quarter ending February 28, 2021, fell 29% to $19.2 million from last year’s $27.3 million for the same time period.  The company attributed it to significantly lower wholesale revenue and lower average selling prices. The company said that last year’s better revenue was due to higher wholesale revenues that were opportunistic in nature and primarily to a single licensed producer.

The company went on to say that the net revenue was also lower due to missed sales opportunities, as certain employees tested positive for COVID-19 which resulted in a significant number of facility staff having to isolate. Organigram said it was unable to fulfill certain demands for its products totaling approximately $7 million in the quarter due to production and processing constraints. 

Trulieve

Florida-based Trulieve Cannabis Corp .  (OTCQX: TCNNF) is continuing its expansion efforts and the latest state to plant its flag is West Virginia. Trulieve has acquired Solevo Wellness West Virginia LLC (“Solevo”) and its three West Virginia dispensary permits for $650,000. Solevo was awarded two permits in Morgantown and one in Parkersburg in January 2021 as part of the West Virginia application process.

New Mexico

New Mexico became the 18th state to legalize cannabis for adults 21 and over after Gov. Michelle Lujan Grisham (D) signed the Cannabis Regulation Act (HB 2) into law on Monday.  New Mexico is now the fifth state to adopt a legalization policy by passing a bill through its state legislature, joining Illinois, Vermont, New York, and Virginia. Thirteen additional states have legalized by voter initiative.

In Other News

Scotts

The Scotts Miracle-Gro Company (SMG) recently announced that it now expects to report sales growth in the band of 4-6% in its U.S. Consumer segment for fiscal 2021, which suggests an increase from its earlier sales guidance of flat to -5%. The Hawthorne segment is forecast to witness a sales growth at the top-end of the guidance of 20-30%. Hence, company-wide sales growth of 8-12% is now expected, up from the previous guidance of 1-6%.

Tilt

TILT Holdings Inc. ( OTCQX: TLLTF ) announced the appointments of Darryl K. Henderson, J.D., as senior vice president of human resources and Roseann Valencia-Fernandez as vice president of marketing. Mr. Henderson will deliver HR solutions across the Company’s portfolio and geographic footprint, while Ms. Valencia-Fernandez will oversee the planning, development and execution of TILT’s marketing strategy. Mr. Henderson and Ms. Valencia-Fernandez will both report directly to TILT’s President, Gary Santo .


StaffStaffApril 13, 2021
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13min17120

New Mexico became the 18th state to legalize cannabis for adults 21 and over after Gov. Michelle Lujan Grisham (D) signed the Cannabis Regulation Act (HB 2) into law on Monday.  New Mexico is now the fifth state to adopt a legalization policy by passing a bill through its state legislature, joining Illinois, Vermont, New York, and Virginia. Thirteen additional states have legalized by voter initiative.

According to Marijuana Policy Project, HB 2 legalizes personal possession of up to two ounces of cannabis and home cultivation of six mature plants for adults 21 and over. Additionally, HB 2 includes measures to encourage those who were disproportionately impacted by prohibition to enter the new industry. A companion bill — SB 2 — will provide for automatic expungement. Legal sales will begin no later than April 1, 2022. A summary of HB 2 is available here.

“We commend New Mexico lawmakers and advocates for ending cannabis prohibition. This move will end the injustice of criminalizing New Mexicans for a substance that is safer than alcohol. States across the country are rolling back prohibition and finding that legalizing and regulating cannabis works. This victory in New Mexico, along with the recent legalization victories in New York and Virginia, will help tip the scale towards federal cannabis reform,” said Steve Hawkins, executive director at the Marijuana Policy Project.

New Mexico Market

UltraHealth, the state’s largest MMJ operator said in a statement, “Combined patient sales from the 34 licensed producers in New Mexico’s Medical Cannabis Program totaled $203 million in 2020, an increase of $74 million or 57% over reported patient sales in 2019. Ultra Health, New Mexico’s #1 Cannabis Company, led all operators with nearly $40 million in patient sales, 71% greater than its nearest competitor.”

Altogether, New Mexico’s top five providers accounted for 55% of reported patient sales in 2020, an increase from 49% the previous year. The top 10 out of 34 total providers accounted for 74% of total patient sales in 2020.

2020 Revenue 2019 Revenue $ Increase % Increase
1. Ultra Health $39,522,044 $19,750,988 $19,771,056 100%
2. PurLife $23,120,494 $15,944,288 $7,176,206 45%
3. R. Greenleaf $20,978,619 $11,888,647 $9,089,972 77%
4. Pecos Valley $16,075,150 $7,338,780 $8,736,370 119%
5. Verdes $11,403,356 $8,394,441 $3,008,915 36%
Total Industry $203,471,624 $129,258,236 $74,213,388 57%

 

“In less than a month, the number of states that have legalized cannabis through the legislative process has more than doubled —  from two to five. While we are encouraged by this progress, we urgently call on the other 32 state legislatures to listen to their constituents and legalize cannabis. With supermajority support for legalization, it is outrageous that more than 1,000 Americans are arrested for cannabis every day,” said Matt Simon, senior legislative analyst at the Marijuana Policy Project.

NORML State Policies Manager Carly Wolf said: “This is a day to celebrate! New Mexico will greatly benefit from this new revenue stream and the creation of thousands of jobs. Most notably though, legalization will spare thousands of otherwise law-abiding residents from arrest and a criminal record, and the state’s new expungement law will help provide relief to many who are suffering from the stigma and other collateral consequences associated with a prior marijuana conviction.”

NORML Executive Director Erik Altieri added: “New Mexico joins an ever-growing list of states that have realized the failures of marijuana prohibition and the harms it brings to their communities and citizens. The American people are demanding an end to prohibitionist policies that have wreaked havoc on communities of color, squandered countless millions in taxpayer dollars, and wasted limited judicial and law enforcement resources on criminalizing otherwise law-abiding individuals for possession of a product that is objectively less harmful than alcohol or tobacco.”


Debra BorchardtDebra BorchardtApril 13, 2021
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4min4450

Florida-based Trulieve Cannabis Corp .  (OTCQX: TCNNF) is continuing its expansion efforts and the latest state to plant its flag is West Virginia. Trulieve has acquired Solevo Wellness West Virginia LLC (“Solevo”) and its three West Virginia dispensary permits for $650,000. Solevo was awarded two permits in Morgantown and one in Parkersburg in January 2021 as part of the West Virginia application process.

“This acquisition enables Trulieve to broaden and solidify our position in the newly created West Virginia market. Solevo was granted three dispensaries as part of the application process entered by the company before becoming part of the Trulieve family. Adding Solevo to our production and dispensary permits, as well as our recently announced definitive agreement to acquire Mountaineer Holdings and its cultivation and dispensary permits, will create a fully vertical presence in the state with nine dispensaries,” said Kim Rivers, CEO of Trulieve. “We look forward to providing the highest level of cannabis products and customer experience through authentic and reciprocal relationships to West Virginia patients.”

West Virginia Has  A Long Way To Go

West Virginia is currently a medical-only state and at this time residents can only register for access to medical marijuana. The state still needs to partner with a testing lab before any products will be available for sale. Patients have to have approval from a doctor and so far, only 30 physicians in the state are eligible to approve a person for medical marijuana. It was four years ago that medical marijuana was legalized in the state, but patients still can’t get it. The state has managed to issue licenses for growers, processors, and dispensaries.

Recently legislators were unable to pass a law decriminalizing adult-use cannabis as fears of such a move meant full legalization.

Matt Simon, a senior legislative analyst for the Marijuana Policy Project, told The Center Square, “Patients in West Virginia have been waiting a long time for safe, legal access to medical cannabis. It has been nearly four years since Gov. Justice signed the medical cannabis bill into law, and there’s no reason the rollout should have taken this long. Other states have been able to implement similar programs in a fraction of the time it has taken West Virginia. Still, the fact that dispensaries have finally been licensed and patients are finally able to register for the program is an important step forward. We look forward to the day that patients will finally be able to obtain medical cannabis from dispensaries in West Virginia.”


Debra BorchardtDebra BorchardtApril 13, 2021
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5min3020

Organigram Holdings Inc. (NASDAQ: OGI) shares were falling over 9% in early trading after the company reported that its revenue fell in the second fiscal quarter of 2021 and then et losses ballooned. Organigram reported revenue for the second quarter ending February 28, 2021, fell 29% to $19.2 million from last year’s $27.3 million for the same time period.  The company attributed it to significantly lower wholesale revenue and lower average selling prices. The company said that last year’s better revenue was due to higher wholesale revenues that were opportunistic in nature and primarily to a single licensed producer.

The company went on to say that the net revenue was also lower due to missed sales opportunities, as certain employees tested positive for COVID-19 which resulted in a significant number of facility staff having to isolate. Organigram said it was unable to fulfill certain demands for its products totaling approximately $7 million in the quarter due to production and processing constraints. The revenue was also negatively impacted by certain provincial boards aiming to manage lower levels of inventory such as Alberta.

The net losses grew by 872% to $66 million from last year’s net loss of $6.8 million. The company said this was largely due to the negative change in the fair value of the derivative warrant liabilities and the negative gross margin in the second quarter.

“Although Q2 2021 results were challenged by industry dynamics, COVID-19 and staffing limitations at our facility, we believe there are excellent prospects ahead for the industry, Organigram and our shareholders,” said Greg Engel, Chief Executive Officer of Organigram. “Nearer term, we are currently tracking to generate higher revenue in Q3 2021 as our new product portfolio continues to gain traction and we become better staffed to fulfill demand. Our recent acquisition of The Edibles and Infusions Corporation positions us to generate revenue from the largest single category of edibles, soft chews or gummies. We also see the potential for meaningful gross margin improvement over time as we revitalize our dried flower portfolio with new Edison and Indi strains and execute on a number of opportunities including the refinement of our cultivation, post-harvesting and packaging processes. Longer-term, we are extremely excited about developing innovative and appealing products to consumers in collaboration with BAT. All of this is made possible and supported by strong liquidity and a balance sheet that is largely debt-free.”

Balance Sheet Solid

Even though it was a fairly disappointing quarter, Organigram still make moves to stabilize its finances. It repaid all outstanding balances (approximately $58.5 million) under its credit agreement with BMO and a syndicate of lenders which will result in annual interest savings of $2.7 million. Currently, it has $232 million in cash and short-term investments.

Looking Ahead

Despite the less than stellar second quarter, Organigram said it expects third-quarter revenue to be higher as the company is improving demand fulfillment with increased staffing. The company’s Moncton facility was shut down during the quarter for deep cleaning due to COVID which caused the company to lose production time in order to fulfill demand.  While COVID could still rear its ugly head, the company is hoping to catch back up from the lost time. It also gave itself some wiggle room by warning that pandemic restrictions for cannabis retail stores, particularly in the most populous province of Ontario, could suppress demand and negatively impact net revenue in the third quarter.

The company expects to generate more revenue growth from the production of soft chews and other confectionery products with the specialized equipment in the Winnipeg EIC facility. Organigram said it is targeting first sales of soft chews in the fourth quarter of 2021 subject to certain achievements, including, but not limited to, the timing of receipt and commissioning of certain ancillary equipment, completion of quality assurance documentation, the hiring of requisite staff and obtaining product listings from the provincial boards.


StaffStaffApril 12, 2021
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6min3520

It’s time for your Daily Hit of cannabis financial news for April 12, 2021.

On The Site

Aphria

Aphria Inc.  (NASDAQ: APHA) stock was getting slammed in early trading after the company reported that revenue dropped versus the last quarter and reported a whopping net loss of $361 million. In addition to that, Aphria missed analysts’ estimates for earnings and revenues. Shares slid over 9% to sell at $14.70.

Aphria delivered its financial results for the third quarter ending February 28, 2021 in Canadian dollars with net revenue increasing 6.4% to $153.6 million versus $144.4 million for the same period last year. However, revenue fell sequentially by 4.3% versus the second-quarter net revenue of $160.5 million. It also missed estimates by roughly $9 million. The company blamed the decline on a decrease in net cannabis and distribution revenue, which was partially offset by an increase in net beverage alcohol revenue from the acquisition of SweetWater.

Real Estate

Real estate is one of the more difficult aspects of the cannabis industry. Securing a license is tough but getting your location is even tougher. Each state has different regulations and restrictions, which combined with unique real estate markets makes finding and securing property essential. It’s an expensive endeavor and one in which traditional mortgages aren’t typically an option. 

This presentation will focus on the New England and New York area cannabis real estate markets. It will cover the following states: Maine, Vermont, New Hampshire, Connecticut, Massachusetts, New York, New Jersey, and Pennsylvania. 

Monogram

The infamous Rat Pack featured singers like Sammy Davis Jr., Frank Sinatra, and Dean Martin. Others like actor Peter Lawford and comedian Joey Bishop also rounded out the group that was known for its hard-drinking and partying ways. Lawford and Davis were well-known cannabis consumers at the time. So it seems fitting that a premium cannabis company like Monogram would seek to emulate the glamour days of old. The new campaign was shot at the stunning Frank Sinatra House in Palm Springs, where MONOGRAM recreated and paid homage to the photography of Slim Aarons. Aarons became famous for his highly stylized poolside vignettes from the early 1960s and his subjects were often glamourous jet setters, celebrities, and socialites.

In Other News

New Mexico is now the fifth state to adopt a legalization policy by passing a bill through its state legislature, joining Illinois, Vermont, New York, and Virginia. Thirteen additional states have legalized by voter initiative. Notably, more than 43% of Americans now live in a jurisdiction with legal cannabis.

Democratic Governor Michelle Lujan Grisham signed two separate measures into law amending the state’s marijuana policies. The first measure (House Bill 2) legalizes and regulates marijuana possession, production, and sales for adults. The second measure (Senate Bill 2) facilitates the automatic review and expungement of the records of those convicted of low-level marijuana offenses. Lawmakers approved both bills during a special legislative session demanded by Gov. Lujan Grisham, who had been a vocal proponent of the reforms.


StaffStaffApril 12, 2021
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The Emerald Cup Festival and Awards was broadcasted live on Social Club TV (www.thesocialclub.TV) – and is available on April 20, 2021 for on-demand viewing on the world’s only cannabis TV network – making 2021’s celebration the most attended in the event’s 17-year history. With musical performances with Ziggy Marley, Michael Franti and Krayzie Bone of Bone Thugs-N-Harmony along with special appearances by Chelsea Handler, B Real, and Willie Nelson Lifetime Achievement Award recipient Winona LaDuke, the event transformed into a TV channel with hundreds of hours of exclusive content. As with tradition, this year’s virtual affair was hosted by founder Tim Blake and his daughter Taylor maintaining the intimate setting the event is known for with fireside chats, expert panels, video of past events, and behind-the-scenes footage.

The Emerald Cup announces its winners for 2021 in each category:

(view list HERE or download the full list in a word document HERE)

Sungrown Flower – Category Winners:

  1. The Farmer and the Felon – Gorilla Snacks, CannaCraft

  2. Canna Country #26, Canna Country Farm

  3. POG (Passion Orange Guava), Greenshock Farms

  4. Legacy Sour, StarSong Farms

  5. Dosilato, Sugar Leaf Extracts

  6. Honey Dew, Esensia

  7. Peppermint Sleigh Ride, Greenshock Farms

  8. Pixie Dust, Esensia

  9. Lime Juice, Esensia

  10. Grease Monkey Flower, Telos Farms

  11. Tire Fire, StarSong Farms

  12. Vanilla Frosting, Sugar Leaf Extracts

  13. LA Kush Cake, Luminescent Farms

  14. Citrus Sunrise, Vacation

  15. Surfin’ Bird, Sunnabis: Humboldt’s Full Sun Farm x Humboldt Heirlooms x Redwood Roots

  16. Purple Sleigh Ride, Greenshock Farms

  17. Hippie Crippler, Cache Creek Orangewood

  18. Orange Terpentine, Greenshock Farms

  19. #9, Canna Country Farm

  20. Gelonade Flower, Booney Acres

 

Sungrown Flower – Breeder’s Cup Winner:

Canna Country #26, Canna Country Farm

 

Mixed Light Flower – Category Winners:

  1. Ice Cream Cake, Local Cannabis Company

  2. Sherbhead, Local Cannabis Company

  3. Modified Grapes, LitHouse

  4. Lemon Crush, Phytologie x Napro Research

  5. Citrus Squirt, Phytologie x Napro Research

  6. Royal Crown, NUG

  7. Monterey Kush Co Gelato 41, Monterey Kush Co

  8. Mochi, Old Briceland Holding Company

  9. Monterey Kush Co Trop Cookies, Monterey Kush Co

  10. Orange Daiquiri, LitHouse

 

Mixed Light Flower – Breeder’s Cup Winner:

Lemon Crush, Phytologie x Napro Research

 

Indoor Flower – Category Winners:

  1. Gelonade, Connected Cannabis

  2. Super Lemon Haze, Garcia Hand Picked x NorCal Cannabis Company

  3. Biskante, Alien Labs

  4. Julius, FloraCal Farms x Seed Junky Genetics

  5. Classic Trainwreck, Abatin Farms x Napro Research

  6. DDV, Panacea (NCC) x Compound Genetics

  7. Juicy Gushy, Atrium Cultivation

  8. Peach Preserves, Phytologie x Biotech Institute

  9. Talking Trees Farms Zmashers, Talking Trees Farms

  10. Chocolate Mintz, Sovereign x Small Boutique Farmz x Hendrix Farm

 

Indoor Flower – Breeder’s Cup Winner:

Gelonade, Connected Cannabis

 

Personal Use Flower – Category Winners:

  1. Tropical Sleigh Ride #1, Mark Greyshock

  2. Steve Urkle, Tim Warda

  3. Orange Terpentine #27, Mark Greyshock

  4. In the Pines, Derek Roseboom

  5. Skangie, Josh Young

  6. Dirty Zkittlez x Lemon O.G., Derek Roseboom

  7. Sol Shine, Walter Wood

  8. Peanut Butter Breath, Tara Mahony

  9. Sherballistic, Star Fargey

  10. Strawberry Danish, Andrew Leitch

 

3rd Party Certified Sungrown Flower – Category Winners

  1. Pink Boost Goddess, Emerald Spirit Botanicals

 

3rd Party Certified Mixed Light Flower – Category Winners

  1. Sour Tangie, Redwood Remedies

 

Hemp Flower – Category Winners

  1. Guava Jam 2.0, Hakira x Biotech Institute

 

Solvent-Less (Ice Water Hash) Concentrates – Category Winners:

  1. Strawberry Jelly 120u Water Hash, Papa’s Select

  2. Kombucha 90u Water Hash, Papa’s Select

  3. Garlic Juice 120u Water Hash, Papa’s Select

  4. Zkittlezmintz, Kalya Extracts by Zenganic Inc x Mojave Cannabis Co

  5. Gargoyle Melon Berry Full Melt, Feeling Frosty x Tar Hill Cannabis

 

Solvent-Less Rosin – Category Winners:

  1. Patty’s Cake, Kalya Extracts by Zenganic Inc x Landhammer Farms

  2. Garlic Juice #3 Fresh Pressed Live Rosin, Rosin Tech Labs

  3. Strawberry Jelly Premium Live Rosin, Papa’s Select

  4. Tropic Sauce, Kalya Extracts by Zenganic Inc x Vesuvio Gardens x Dancing Dog Ranch

  5. Rainbow Belts Solventless Live Rosin, Humboldt Terp Council x Devi

  6. Banana Peel x Wilson, True Hash Company x ABR Farms

  7. Garlic Cookies Live Rosin Batter, Rosin Tech Labs

  8. Papaya Cake, Kalya Extracts by Zenganic Inc x Dancing Dog Ranch x Landhammer Farms

  9. Uncrustable Headstash Live Rosin, Feeling Frosty

  10. Lemon Berry Premium Live Rosin Badder, Papa’s Select

 

Solventless Personal Use – Category Winners:

  1. Orange Elixir Full Spectrum 45-159 Live Rosin, Brett Byrd

  2. Fat Tropaya, Michael Alamares

  3. Tahoe C4 Full Spectrum 45-159 Live Rosin, Brett Byrd

 

Hydrocarbon Liquid – Category Winners

  1. Gelonade Live Resin, Humboldt Terp Council x Booney Acres Farm

  2. Sugaree – Live Resin Sauce, Terphogz x Humboldt Terp Council

  3. Cresco “Lemon Bean” – Sauce, SLO Cultivation Inc

  4. Pineapple Passion Zkittlez- Live Resin Sauce, Terphogz

  5. Tar Hill Strawberry Lemonade Live Resin, WOX EXTRACTS x Tar Hill Cannabis

  6. Holy Water And Diamonds, Chanel Group Of Oakland x Grandiflora Genetics x Holy Water

  7. Wedding Cake Live Resin Sauce, Accentian, Inc. x Gold Drop

  8. Medusa Cosmic Live Resin Diamonds & Sauce, Cosmic x Norse Organics

  9. URSA Extracts Runtz Live Resin, URSA Extracts/Bear Extraction House

  10. Refined Live Resin Diamonds – Strawberry Rosé, Raw Garden

 

Hydrocarbon Solid – Category Winners

  1. Moonbow Butter Frosting, Suprize Suprize x High Water Farms x Field Extracts

  2. Dosilato (Live Resin Budder), Beezle Brands x Bon Vivant Farms

  3. Sapphire Shiznit, Suprize Suprize x High Water Farms

  4. Strawnana Runtz, CaliStripe Concentrates x Kali Farms x Mendoja Farms

  5. Zerbert frosting, Cali Kosher

  6. Super Lemon Haze, Moxie (Pure CA, LLC.)

  7. Vanilla Frosting, Suprize Suprize

  8. Lemonnade – Cake Mix 1g Badder, ArcataX x Willow Creekside Farms

  9. Purple Medusa Cosmic Live Resin Batter, Cosmic x Norse Organics

  10. Lemonnade – Lion’s Mane 1g Badder, ArcataX x 1L Garden Supply

 

Pre-Rolled Infused – Category Winners

  1. Dirty Zkittles Hash Roll, Compassionate Manufacturing x Pinnacle Farms

  2. Mother’s Milk Geode Joint, Sovereign

  3. Banana OG x Cherry Fritter 1g Infused PreRoll, Lift Tickets x Fresh Baked

 

Pre-Rolled Non-Infused – Category Winners

  1. GMO Cookies x Juice Z, Atrium Cultivation

  2. ZRUNTZ Pre Roll 5 pack, Terphogz

  3. Lemon Lava, LitHouse

 

CBD Flower – Category Winners:

  1. Citrus Gummies, Abatin Farms x Biotech Institute

  2. Pennywise, Esensia

  3. Mountain Medicine, Hogwash Pharms

 

CBD Flower Breeders Cup Winner:

Citrus Gummies, Abatin Farms x Biotech Institute

 

CBD Cartridge – Category Winners:

  1. Tsunami Dog, Chemistry. x Moon Made Farms

  2. Canna Banana, Savage Farms x Humboldt Alchemy Group

  3. Care by Design 18:1 Vape Cartridge, CRFT Manufacturing, Inc.

 

CBD Edibles – Category Winners:

  1. Potli Dream Honey, Haute Supply LLC

  2. CBD Gummy Space Gems, Space Gems

  3. Care by Design 4:1 Gummies, Lemon, CRFT Manufacturing, Inc.

 

CBD Topicals – Category Winners:

  1. Himalayan Kush Mineral Salt, OM

  2. Rasta Cream, C.A.D (Carter’s Aromatherapy Designs)

 

CBD Tinctures – Category Winners:

  1. Extra Strength CBD Elixir Made With Sun Grown ACDC, OM x Island Mountain Organics

  2. Fiddler’s Greens, Kindred Spirit Raw Tincture, Fiddler’s Greens x High Tide Distribution

  3. AC/DC, Chemistry. x Lazy Moon Ranch

 

CBD Concentrates – Category Winners:

  1. Cremedy Full Spectrum Oil, Bird Valley Organics

  2. High CBD Full Spectrum Oil, Bird Valley Organics

 

Hemp Derived Topicals – Category Winners:

  1. Icey Stick, OM

  2. Extra Strength CBD Cream, Vital Body Therapy LLC

  3. CBD Releaf Body Oil, Papa & Barkley

 

Cartridges CO2 – Category Winners:

  1. Burzt, Rove

  2. Red Velvet Balanced, Savage Farms x Humboldt Alchemy Group

  3. Mistifi Houdini, Cannabistry

 

Cartridges Live Resin – Category Winners:

  1. Arcata Fire Live Resin Vape – Runtz, ArcataX x Great Expectations Farm x Lightwork Distributors

  2. URSA Liquid Diamond Sauce Cartridge “Tar Hill Pink Lemonade”, URSA EXTRACTS (Bear Extraction House) x Tar Hill Cannabis

  3. URSA Nova Blueberry Muffin Cartridge, URSA Extracts

  4. Banana Creme – Solventless Vape, Jetty Extracts

  5. KryptoChronic – Live Resin Pen, Alien Labs

  6. Lemonatti – Live Resin Pen, Connected Cannabis

  7. URSA Extracts Lemon Super Glue Liquid Diamond Sauce, URSA Extracts

  8. Alien Mints – Live Resin Pen, Alien Labs

  9. Collins Ave – Pink Rozay 0.5g Cartridge, ArcataX x 1L Garden Supply

  10. Cresco x Floracal Mentholotti – Liquid Live Resin, SLO Cultivation Inc. dba Cresco Labs x Floracal Farms

 

Cartridge – Distillate – Category Winners

  1. Blue River Chocolate Orange Jelly Sauce Cartridge, fresh baked x Blue River

  2. Banana Cream, Beezle Brands

  3. The Monarch, Golden Tangie, Solventless Terpenes, LEGION of Bloom

 

Cosmetic Topicals – Category Winner

  1. RENEWING SERUM, Green Bee Botanicals

  2. Rose Geranium Bath & Body Oil, OM

 

Therapeutic Topicals – Category Winners:

  1. Arnica Pain Relief Epsom Salt, OM

  2. Sweet Releaf Comfort Warms 30ml Cannabis-Infused Dry Oil Roll On For Pain & Inflammation, Strictly Topical

  3. Lion Balm, OM

 

Tincture – Category Winners:

  1. Lempire Farmaseed Dirty Zkittlez Rosin Tincture, LH Manufacturing, LLC x Compassionate Heart Mutual Benefits Corporation

  2. Extra Strength Nighttime Elixir, OM

  3. Compassionate Heart Garlic Logs 300mg THC 10mg CBD Rosin Tincture, LH Manufacturing, LLC x Compassionate Heart Mutual Benefits Corporation

 

Innovative Products Winner:

SOW YOUR OWN MAGIC-mom and pop seed pucks, Huckleberry Hill Farms

 

Edibles – Beverages – Category Winners:

  1. Hi-Fi Hops Unplugged, CRFT Manufacturing, Inc.

  2. Mad Lilly- Passion Fruit Mango Spritzer, K-Zen Beverages manufactured by Spacestation

  3. The Fizz- Ginger Root, Manzanita Naturals

 

Edibles – Sweet – Category Winners:

  1. OM & Feeling Frosty Vegan Rosin Gummi, Mixed Berry, OM x Feeling Frosty Hash x Tar Hill Cannabis
  2. GO, CLICK Spray
  3. Sour Gummy Space Drops, Space Gem
  4. Satori Chai Spiced White Chocolate, CRFT Manufacturing, Inc.
  5. Assorted Flavors 12pk Marshmallows, Mellows
  6. “Munchie” THC Chocolate Peanut Butter Bar, Chocolate Haus
  7. Strawberries & Cream Super Mellows Marshmallows, Mellows
  8. Brown Butter Sage & Smoky Vanilla Super Mellows Marshmallows, Mellows
  9. “White w/ Oreo” THC White Chocolate w/ Oreos Bar, Chocolate Haus
  10. “Strawberry” THC White Chocolate w/ Strawberries Bar, Chocolate Haus

Edibles – Savory – Category Winners:

  1. Potli SrirachaHaute Supply LLC

  2. GF Rosemary Garlic Crackers 100mg Hybrid – 4 PackHigher Edibles

  3. Chile Limon Canna-Corn Kernels – GFHigher Edibles

Eco-Conscious Packaging Category Winner:

Tree Hugger Container’s Sustainable 6-pack Eco-Conscious packaging, Tree Hugger Containers

The Emerald Cup 2021 Photo Contest Winner:

Resilience, David Cooper


StaffStaffApril 12, 2021
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5min3120

The infamous Rat Pack featured singers like Sammy Davis Jr., Frank Sinatra, and Dean Martin. Others like actor Peter Lawford and comedian Joey Bishop also rounded out the group that was known for its hard-drinking and partying ways. Lawford and Davis were well-known cannabis consumers at the time. So it seems fitting that a premium cannabis company like Monogram would seek to emulate the glamour days of old.

The new campaign was shot at the stunning Frank Sinatra House in Palm Springs, where MONOGRAM recreated and paid homage to the photography of Slim Aarons. Aarons became famous for his highly stylized poolside vignettes from the early 1960s and his subjects were often glamourous jet setters, celebrities, and socialites.  With wardrobe playing such a critical role in the art direction High Snobiety Fashion Director Corey T. Stokes styled each contemporized photo, with timeless looks immortalized by Aarons’ original work, while seamlessly weaving in modern accents or pops of streetwear. Featured personalities include ‘Best New Artist’ Grammy nominee Chika, New York-based trio of culinary experts & activists Ghetto Gastro, rapper & songwriter Curren$y, designer & stylist Aleali May, and fashion & beauty model Slick Woods. The cast of individualistic visionaries and icons of tomorrow are depicted across the campaign creative lounging on floats with MONOGRAM product in hand, basking in outdoor opulence and establishing a new good life, redefined.

From Palm Springs To NYC

Launching just in time for 4/20, the campaign is currently on display across all major U.S. markets including New York State, which recently legalized adult use of cannabis on March 31, 2021. Billboards and sprawling wallscapes featuring the photography can be found throughout well-traveled areas of New York City – from Times Square to SoHo to Brooklyn – further underscoring this major step in helping to destigmatize cannabis and drive progress forward for the industry

“On the heels of legalization, seeing creative like this become a natural part of the fabric of New York City only reinforces that cannabis has a right to exist within our customs, arts and social institutions,” shared Mr. Carter. “New York’s decision to legalize is a victory for the entire industry, and I’m excited to have MONOGRAM play a role in bringing that message to life in my own backyard.”

Slim Aarons

Slim Aarons’ life’s work was devoted to capturing as he put it “attractive people, doing attractive things in attractive places.” The photographs he created over four decades at the world’s finest locales have since become synonymous with mid-century luxury, beauty and leisure. MONOGRAM tapped Williams to reimagine several of these quintessential images – including “Keep Your Cool,” “Desert House Party,” “Poolside Glamour,” “Leisure and Fashion” and more – starring an updated cast of diverse personalities. The resulting imagery illustrates the dynamic, expanding landscape of modern luxury, and how it intersects with a new chapter in cannabis culture.

“The perception around cannabis has shifted a lot since the 20th century. If you were to ask me and my peers how we’d define the good life today, weed would definitely be a part of it. Whether we’re smoking to inspire creativity or to celebrate an achievement, cannabis has a rightful place in modern day culture,” said  photographer Hype Williams. “HOV has a vision for the industry that he’s bringing to life through MONOGRAM. His focus for this campaign was to showcase how beautifully cannabis fits into the good life today, and I am honored to be a part of it.”


Debra BorchardtDebra BorchardtApril 12, 2021
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14min8270

On April 13, at 3pm eastern, Green Market Report will be hosting a virtual event title “The State of Cannabis SPACs”. This event features Ceres Acquisition Co. CEO Joe Crouthers and Bengal Capital Managing Director Sanjay Tolia. Have SPACs pushed the valuations of cannabis companies too high? Are investors overwhelmed with too many SPACs coming on the market so quickly? So many questions – tune in for the answers. Register at http://bit.ly/3cfWe1Q

 

Hundreds of millions of dollars have been raised for cannabis-focused SPACs (special purpose acquisition companies) over the past year making them the hot ticket in 2020. Add to that the celebrity names attached to some SPACs and you can see the attention they are getting. SPACs draw a lot of focus, but does it make sense for the average investor to join in on them? 

While it seems like SPACs just appeared on the scene, the instruments have been around for some time and were really popular right before the financial crisis. Hard to say if history will repeat itself. After that, the popularity of SPACs faded somewhat and they didn’t really make a big comeback until 2020. For example, in 2019 just 59 SPACs were launched. In 2020, 248 SPACs were started making up 50% of the total IPO volume in the year. 

SPAC 101

SPACs have captured many headlines over the past year and most investors aren’t very familiar with the structure of these unique investments. The basic gist is that a sponsor ponies up a few million dollars to pay for the Initial Public Offering  (IPO) costs of what is called a “blank check” company. The sponsor also brings in or joins with a management team. Some of these teams have already had some cannabis experience and want to repeat a previous success. Some have a celebrity name attached to the SPAC. 

The SPAC typically has 24 months to find a company to buy or merge with, which is called the Qualifying Transaction or QT. The SPAC IPO investors often get in at $10 share with a half warrant to buy another share at $11.50. They also typically get the right to redeem their stock for cash value ($10 plus interest) if they do not like the QT. If the QT is completed, the management team usually gets 20% of the new company’s equity. In other words, the SPAC investor basically puts that $10 a share in the bank and can withdraw it if they don’t like the deal or hold on and potentially sell in the secondary market at a premium. 

Cannabis SPAC Returns Drop

Cannabis investment company Bengal Capital wrote, “What does the average buyer of a SPAC on the exchange get? They also get the right to redeem their share for $10, but no warrants. So what they are generally buying seems to be the “story” – that the SPAC sponsor and management will be successful, and the investor can join their team and profit from their success.” Bengal Capital. Bengal Capital’s Managing Director Jerry Derevyanny added, “You can see this in the cannabis SPACs from the fact that many of them trade at a significant premium to their redemption value – meaning that investors are valuing the right to “join the team” greater than the right to get $10 of cash.”

Bengal Capital also pointed out that of SPACs that merged between January 2019 and June 2020, the median percentage of IPO proceeds that was redeemed (that is the cash was given back to the holder of the share) equaled 73% – over one-third of SPACs had over 90% redemptions. According to Bengal, redeeming shareholders averaged an annualized return of 12%. Unfortunately, a year later the post-merger returns of the SPACs were down by 35%, due to these redemptions. 

Cannabis SPACs

One of the first cannabis SPACs was MTech Acquisition, whose QT in 2018 was cannabis software company Akerna (NASDAQ: KERN). Over 4.4 million shares were redeemed prior to the IPO as investors exercised their displeasure with the deal. However, the stock popped in the early days of trading and even hit a high of $72 on June 1, 2019, before settling down to trade around $10 through the summer. The stock though has struggled to maintain its value, breaking below $10 and was lately selling at $5.80. 

In December 2020, Silver Spike Acquisition Corp. (Nasdaq: SSPK) announced its agreement for a business combination with WeedMaps or WM Holding Company that would result in WeedMaps becoming a public company on the NASDAQ marketplace. The estimated post-transaction equity value of the combined company was approximately $1.5 billion and provided up to $575 million of gross proceeds through the approximately $250 million of cash held-in-trust by Silver Spike Acquisition Corp. and a fully-committed common stock PIPE of $325 million.  WMH has grown revenue at a CAGR of 40% over the last five years and is on track to deliver $160 million in revenue and $35 million in EBITDA for 2020. The company said in a statement that as a result of outsized demand, the PIPE offering was significantly oversubscribed and upsized. Just last week, Silver Spike Acquisition Corp II priced a $250 million IPO that is to be listed on the Nasdaq Capital Market and trade under the ticker symbol “SPKB.”

In January 2021, TPCO Holding Corp. (OTCQX: SBVCF, SBVQF) completed its qualifying transaction to acquire CMG Partners Inc. better known as Caliva and Left Coast Ventures, Inc. with global icon, entrepreneur, and MONOGRAM founder, Shawn “JAY-Z” Carter and entertainment powerhouse Roc Nation. TPCO said it expects pro forma revenues of $334 million in 2021. A couple of weeks ago the company reported that its unaudited consolidated pro forma revenues for the year ended 2020 were $188.7 million, a 76% increase over 2019’s $107.2 million. The unaudited consolidated pro forma EBITDA loss for the year ended 2020 was $126.1 million compared to a loss of $136.1 million in 2019. TPCO said it had $337.9 million of unaudited consolidated pro forma cash available on December 31, 2020, to execute on its growth strategy. The cache of Jay-Z has added glitz to this TPCO, but don’t expect to be partying with the media mogul if you buy shares. 

Last month, Ceres Acquisition Corp.  (OTCQX: CERAF) entered into an agreement that would result in multi-state cannabis operator Parallel becoming a public company. The investors are said to have an over-subscribed private investment in public equity (PIPE) of $225 million. The deal is expected to close in Summer 2021. The deal values Parallel (which used to be called Surterra Wellness) at an implied enterprise value of $1.884 billion with expected net revenues of $447 million in 2021. The expected pro forma cash on hand of $430 million at the close, including the $225 million from the PIPE and $120 million of cash held in Ceres’ escrow account assuming no redemptions. This company’s pedigree includes chewing gum heir William “Beau” Wrigley Jr., who is Chairman and CEO of Parallel, and Scott “Scooter” Braun, who is the Co-Founder of Ceres Group Holdings and is known for his music industry investments and ventures. 

On February 19th, 2021, Choice Consolidation Corp. (NEO: CDXX.UN.U), a Chicago-based SPAC with senior management led by CEO Joe Caltabiano, the former CEO of Cresco Labs, closed a $150 million IPO. Viridian Capital Advisors said, “Choice broke new ground by providing only ¼ of share warrant per unit versus previous SPACs units that typically contained either ½ warrant or a full warrant. Choice is a sign of how hot the SPAC rage is and is a vote of confidence in the future of the cannabis equity market: investors must believe that SPACs can earn attractive returns from acquisitions completed at current levels.”

Just a couple of weeks ago, Greenrose Acquisition Corp. (NASDAQ: GNRSU, GNRS, GNRSW) said it had entered into definitive agreements to acquire four cannabis companies, which it has dubbed The Platform. The companies are Shango Holdings Inc. (Shango), Futureworks LLC (d/b/a The Health Center), Theraplant, LLC, and True Harvest, LLC. The total initial transaction value is $210 Million with a maximum earnout of $110 million. Greenrose plans to initiate an offering of $150 million in equity and debt securities and plans to use the net proceeds for the acquisition of the Platform and general corporate purposes.

Capital Looking For Cannabis

At this point, it looks like one cannabis SPAC still needs to deploy its capital Merida Merger I, with a $130 million and a Nov. 7, 2021, deadline. The pool for potential QT’s though is getting tighter. It becomes an insider parlor game, guessing which company that is still private and is bringing in the revenue to make it a target. Some names like luxury smoking accessory company PuffCo rise to the top of the list. 

Charles Kieley, Co-Founder and Chief Operating Officer, Kings Garden believes PuffCo belongs with another luxury brand. He said, “Subversive is a potential buyer of any company that really is prominent in this space. Puffco may not be directly tied to luxury, but they are the number one hardware device maker in their category for portable concentrate consumption.  And they have a huge market share for concentrate consumption, so I can see Subversive taking interest.  I could see them being interested, again, because of profitability and the growth trajectory.” 

Even Kings Garden could be a potential target. It was founded in 2015 and is private, profitable, and has no debt. The company closed out 2020 with $84M in revenue and is leading cannabis cultivation, processing, and manufacturing company based in California’s Coachella Valley. 

With regards to new SPACs, Viridian Capital Advisors recently said, “We think keeping the size down at $100 million is smart because prices of assets have run up, and finding deals that will pass muster with SPAC investors is getting more difficult.”

In Closing

It seems retail investors would be better suited to have a short time horizon on SPAC investments. The redemption from the original investors tends to be high and the prices paid for the QT’s look to be at a premium due to the shrinking pool of potential deals. Still, there are some bragging rights to say you’ve invested alongside Jay-Z.  

 


Debra BorchardtDebra BorchardtApril 12, 2021
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7min3660

Aphria Inc.  (NASDAQ: APHA) stock was getting slammed in early trading after the company reported that revenue dropped versus the last quarter and reported a whopping net loss of $361 million. In addition to that, Aphria missed analysts’ estimates for earnings and revenues. Shares slid over 9% to sell at $14.70.

Aphria delivered its financial results for the third quarter ending February 28, 2021 in Canadian dollars with net revenue increasing 6.4% to $153.6 million versus $144.4 million for the same period last year. However, revenue fell sequentially by 4.3% versus the second-quarter net revenue of $160.5 million. It also missed estimates by roughly $9 million. The company blamed the decline on a decrease in net cannabis and distribution revenue, which was partially offset by an increase in net beverage alcohol revenue from the acquisition of SweetWater.

Aphria also reported a net loss for the third quarter of $361.0 million, or a loss of $1.14 per share versus a net loss of $120.6 million, or a loss of $0.42 per share in the second quarter. This missed the analyst’s estimate by $1.09.  Last year in the third quarter Aphria posted a net income of $5.7 million, or earnings $0.02 per share. The company said that on an adjusted basis excluding the impacts of the items noted that it actually recorded a net loss for the third quarter of the fiscal year 2021 of $47.9 million, or a loss of $0.15 per share.

“The duration and impact of lockdowns across many of the regions we operate in, particularly in Canada, were greater than we initially anticipated for the cannabis industry and our business; however, we believe Aphria remains well-positioned with our leading brands and market share to experience a robust increase in our top-line as the market improves,” said Irwin D. Simon, Chairman, and Chief Executive Officer. “In the U.S., we had a solid first full quarter of contribution from SweetWater even with lower on-premise sales compared to the prior-year quarter as many foodservice industry establishments were still operating with limited capacity. Going forward, we are excited about the strategic opportunities for incremental growth as we look to parlay our branded consumer products into additional complementary product offerings in Canada, the U.S., and internationally.”

Covid & Falling Prices

The pandemic continues to weigh on the company. Aphria said that it had to lower its inventory levels due to lockdowns.  Aphria said it believes this is a transitory reduction in demand during the quarter.  “These provincial government measures resulted in decreased orders from provincial boards and product returns of approximately $5.0 million. The Company mitigated a portion of the product return by finding alternative distribution channels for some of the products but experienced a reduction in net cannabis revenue as a result of $4.1 million.”

The company also noted that the average retail selling price of medical cannabis, before excise tax, decreased to $6.69 per gram in the quarter, compared to $6.96 per gram in the prior quarter. In a statement, Aphria said that the decline was a result of specific pricing programs offered to assist patients in need who have been negatively impacted by the COVID-19 pandemic, along with other promotional programs. The average selling price of adult-use cannabis, before excise tax, decreased to $3.82 per gram in the quarter, compared to $4.29 per gram in the prior quarter, primarily due to consumer trends towards the purchase of large-format and price compression in the market.

Mr. Simon continued, “We remain excited with the opportunities created for both Aphria shareholders and Tilray stockholders in completing our proposed business combination with Tilray, and believe that together, we will create one of the strongest global cannabis and consumer packaged goods companies in the world.  We expect to have a tremendous runway for long-term sustainable growth as we build upon our existing foundation in Canada and internationally by increasing the scale of our global operations. We expect Aphria and Tilray’s complementary cultures of innovation, brand development, and cultivation to further set us apart from others in the industry along with the strength of our balance sheet and cash availability as we enhance value for all stakeholders.”

In December Aphria and Tilray announced that the two companies would be merging. Aphria shareholders will receive 0.8381 shares of Tilray’s for each Aphria stock they own. Aphria will own about 62% of the combined company, however, the merged company will supposedly be known under the Tilray name and would trade with the TLRY stock ticker. In November, Tilray reported that its total revenue for the third quarter was flat at $51.4 million and up 2.0% sequentially.


Debra BorchardtDebra BorchardtApril 12, 2021
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27min14590

Real estate is one of the more difficult aspects of the cannabis industry. Securing a license is tough but getting your location is even tougher. Each state has different regulations and restrictions, which combined with unique real estate markets makes finding and securing property essential. It’s an expensive endeavor and one in which traditional mortgages aren’t typically an option. 

This presentation will focus on the New England and New York area cannabis real estate markets. It will cover the following states: Maine, Vermont, New Hampshire, Connecticut, Massachusetts, New York, New Jersey, and Pennsylvania. 

Many of the states that have gone fully legal – meaning legalized both medical use and adult-use cannabis often have opt-out clauses for municipalities. This means that in some areas if a town or village decides against allowing cannabis stores or facilities in its location, that puts even more demand for locations in the municipalities that approve cannabis businesses. 

Growth in the Northeast

The Northeast cannabis industry has been expanding at a blistering pace. In 2018, there were only 187 dispensaries across nine states. Fast forward to March 2021 and you see the number has jumped to 424. Of this 424, only Massachusetts and Maine have adult-use products for the sale, the rest are entirely medical marijuana. These numbers are expected to jump even higher as states like New Jersey and New York go fully legal. “It plays out in typically New England ways – Maine has been really friendly, Portland was very competitive,” said MMLG Managing Director Brian Lauvray. 

 

Dispensary/Retailers 2018-YTD 2021
State 2018 2019 2020 3/2021
CT 18 18 18 18
MA 65 98 161 206
ME 8 8 20 23
NH 4 5 5 5
NJ 6 8 13 14
NY 30 38 38 38
PA 47 76 104 110
RI 3 3 3 3
VT 6 6 7 7
Total 187 260 369 424
Copyright © 2021 by CNB Media LLC dba Cannabiz Media
Source: Cannabiz Media License Database www.cannabiz.media

Massachusetts

One area in Massachusetts that saw a dispensary boom is Great Barrington. This lovely town in the heart of the Berkshire mountains is a center for tourism. Skiing in the winter, plus hiking, biking and camping in the summer. There’s a bustling summer performance calendar as well that brings lots of baby boomers up to watch dance and theatre groups. It’s the perfect place to locate a dispensary and the town initially opened its doors. 

That sparked a flood of dispensaries and now the town, despite having no cap on stores is saying they have enough, thank you. The population has less than 7,000 people but 5 dispensaries. Springfield in the middle of the state has attracted several stores and then Boston and its surrounding suburbs has numerous dispensaries, but there are big pockets of the state where there are zero dispensaries. Mostly due to the lack of a major highway or tourist center.

Capitalizing on the Asset

Cannabis companies continue to struggle with getting big mortgages for buildings. They continue to use the capital raised in order to fund a store or facility purchase. The later, the company can sell the property to a REIT or real estate investment trust and then lease it back. Innovative Industrial Properties or IIP is a popular REIT that has done this so often, that it is the leader in the space. 

Let’s look at Massachusetts again. Almost every big player in the space has sold a property to IIP. (The investment figure is in thousands and the data is from the IIP 2020 annual report.)

 

Rentable Sq. Ft Investment
PharmaCann MA Massachusetts May 31, 2018 58,000 30,500
Holistic MA Massachusetts July 12, 2018 55,000 14,750
Trulieve MA Massachusetts July 26, 2019 150,000 43,500
Ascend MA Massachusetts April 2, 2020 199,000 33,775
Cresco MA Massachusetts June 30, 2020 118,000 8,904
4Front MA Massachusetts December 17, 2020 67,000 15,500

In 2020, IIP closed on the acquisition of a property in Massachusetts, which was approximately 118,000 square feet of industrial space in the aggregate. The purchase price for the property was approximately $7.8 million (excluding transaction costs). IIP also entered into a long-term, triple-net lease agreement for the property with a wholly owned subsidiary of Cresco Labs Inc. (Cresco), which intends to operate the property as a regulated cannabis cultivation, processing and dispensing facility upon completion of redevelopment. Cresco is expected to complete additional tenant improvements for the property, for which IIP has agreed to provide reimbursement of up to $21.0 million. Assuming full reimbursement for the tenant improvements, IIP’s total investment in the property will be approximately $28.8 million.(Data from IIP’s annual 2020 report)

Going back a couple of years in 2018, closed on the acquisition of a property located at 96 Palmer Road in Monson, Massachusetts, which comprises approximately 55,000 square feet of industrial space situated on approximately 5.4 acres. The purchase price for the property was $12.75 million. Concurrent with the closing of the purchase, the Company entered into a long-term, triple-net lease agreement with Holistic Industries, Inc. (“Holistic”), which intends to continue to operate the property as medical-use cannabis cultivation and processing facility in accordance with Massachusetts medical-use cannabis regulations. 

Newcomers – New Jersey & New York

Massachusetts looks like an old-timer compared to the soon-to-be fully legal states of New Jersey & New York. Both markets are expected to be sizable and both are only legal for medical marijuana at this time. Both have recently decided to legalize adult-use cannabis and New Jersey could begin sales in 2021, while New York will begin sales on April 1 2022. Both states are also famous for expensive real estate. 

Any new entrant to the market is best served by hiring a consultant that knows the ins and outs of navigating the red tape that comes with cannabis. The competition for licenses will be fierce. Brian Lauray from MMLG consultants said, “New York & New Jersey will be a battle royale from an application standpoint. Borough commissioners and aldermen and who you know.” Plus, both states allow municipalities to opt out of the cannabis industry. “In New Jersey, a few desirable municipalities have indicated they are open for business – like Jersey City,” said Lauvray. “It’s a really interesting market – everyone wants in. But there is a lot of demand and not a lot of supply. It will come down to the operators that have the money and can tweak many levers” 

IIP has also been busy in the New York market buying properties despite the relatively small size of the number of stores and facilities. New York is a limited license state that only gave 10 operators the opportunity to be in the industry. That will change with full legalization, but those 10 operators have all struggled with the medical-only nature of the state. It had a very restricted list of conditions in order to get the license and sales have been dismal versus the amount of money invested. So it was no surprise to see some companies selling off real estate to IIP in order to get some cash in the kitty.  

IIP said in a securities filing that in December 2019, one of its properties in New York accounted for 6% of our net real estate held for investment. In December 2020, the company said it amended its lease and entered into a development agreement with PharmaCann at one of our New York properties, making available $31.0 million in construction funding at the property. “Assuming full payment of the construction funding, our total investment in the property will be $61.0 million. As of December 31, 2020, we incurred approximately $70,000 of the construction costs, of which none was funded.”

 

Rentable Sq. Ft Investment
Curaleaf NJ   New Jersey July 13, 2020 111,000 18,940
Columbia Care NJ Portfolio   New Jersey July 16, 2020 54,000 13,033
PharmaCann NY   New York December 19, 2016 127,000 30,000
Vireo NY   New York October 23, 2017 40,000 6,717

 
In New Jersey, the Columbia Care parcel is actually two properties and IIP said that Columbia Care was expected to redevelop one of the properties and IIP would reimburse them $1.6 million. Curaleaf was redeveloping its building with a reimbursement of up to $29.5. IIP said  $20 million was spent on redevelopment costs and IIP funded $13.4 million of that. Both New Jersey and New York give cannabis companies the best of both worlds. Each state has urban dense population locations and then long-term agricultural areas. In upstate New York, much of this agricultural land is economically depressed as well and welcomes large-scale grow facilities despite the smell and light pollution. 

Pennsylvania

Pennsylvania is a medical-only state at this time, although there seems to be incredible pressure on the state to go fully legal as its neighbors New York and New Jersey. In the last 12 months, Pennsylvania medical cannabis sales totaled $910 million. Medical cannabis sales have grown steadily in the past 13 months, starting at $40M in January 2020 and ending at close to $98M in January 2021. The state’s stores have grown from 47 in 2018 to 110 in 2021 for just a medical market. The size of the spaces is growing as well. While Canadian companies may have overbuilt facilities, Pennsylvania operators are clamoring for more. In December Ayr Strategies closed on the purchase of CannTech PA for $57 million. This acquisition included a 143,000 sq. ft. cultivation and processing facility on 13 acres.

 

Rentable Sq. Ft Investment
Jushi PA Pennsylvania April 6, 2018 89,000 13,381
Maitri PA Pennsylvania April 24, 2019 51,000 21,402
Green Leaf PA Pennsylvania May 20, 2019 266,000 13,592
PharmaCann PA Pennsylvania August 9, 2019 54,000 25,730
GTI PA Pennsylvania November 12, 2019 148,000 39,600
Curaleaf PA Pennsylvania December 20, 2019 72,000 25,749
Holistic PA Pennsylvania June 10, 2020 108,000 15,007

Parallel is working to set up a 120,000-square-foot grow facility in a space owned by The Buncher Co. in the Chateau neighborhood of the North Side, working in partnership with the University of Pittsburgh through its venture called Goodblends PA. The company said that the venture needed a big building for a range of uses that will include growing and processing medical cannabis products, conducting research, training employees as well as meeting basic distribution and warehousing demands. A fully legal state could see an additional boost in real estate. At this time, Pennsylvania is IIP’s second-largest market for a property with rents accounting for 15.7% of rental revenue. Seven properties with 788,000 rentable square feet bring in $18.3 million a year (as of December 2020). 

Maine

An example of the effect on a fully legal state can be seen in the recent increase in stores in Maine, which jumped from 8 in 2019 to 23 in 2021. Propco., a subsidiary of New York-based real estate investment trust Power REIT acquired a three-acre property in York County, Maine. The sales price was $400,000. That property currently houses an under-construction, 32,800-square-foot cannabis cultivation facility. It also has a 2,800 square foot processing/distribution building with construction recently completed. PropCo. Said it will fund the construction of an additional 9,900 square feet of processing space and the renovation of an existing 2,738 square foot building at the recently acquired property. The completion of construction on the new property is targeted for Summer 2021.

The combined properties are expected to be one of the largest cannabis greenhouse cultivation and processing/distribution properties in the state of Maine upon completion. David Lesser, Power REIT’s Chairman and CEO said that it’s not easy to raise capital for large-size facilities despite all the talk. He also noted this his REIT is focused on greenhouse cultivation facilities. 

CT, NH, RI

The remaining states are relatively smaller parts of the real estate story in the Northeast. Connecticut has four producers that account for 18 dispensaries and facilities. Vermont has seven, New Hampshire has five and Rhode Island has three. This week a bill to legalize marijuana in Connecticut was approved by a key committee on Tuesday—but it “remains a work in progress,” the chairman said. The legislation is said to be backed by the governor and includes a series of new social equity provisions. A week ago, Marijuana Moment reported a pair of Rhode Island Senate committees held a joint hearing on two marijuana legalization proposals—including one proposed by the governor—as well as several bills to reform the state’s existing medical cannabis program. In late 2020, Vermont’s governor allowed a legalization law to take effect without his signature. However, it may be some time before actual legal sales can begin as decisions around licensing have yet to be decided. 

Rents

Ultimately, the real estate side of cannabis seems to be a solid choice. Lesser said that so far in cannabis if tenants have trouble making the rent, it often gets worked out. Either new investors come in or the company is acquired, but the situation is typically resolved. IIP has noted that its rents are on time as well. In October 2019, a court-appointed a receiver of the tenant at its Los Angeles, California property. That tenant subsequently defaulted on its lease payments to us for all of 2020. It had been leased to Vertical in southern California, in which Vertical made partial payments of contractual rent due.

The purchase price for the southern California portfolio was approximately $17.3 million.  Then Holistic the cannabis operations from the tenant, which had been in receivership. Holistic closed on this transaction and then quickly executed a long-term, triple-net lease with IIP for the entire property. Assuming full reimbursement for the redevelopment of the property, IIP’s total investment in the property will be $24.0 million. The company did say that for some or all of 2021, it expected that many of its tenants would continue to incur losses as their expenses increase in connection with the expansion of their operations and that they have made and will continue to make rent payments to us from proceeds from the sale of the applicable property or cash on hand, and not funds from operations.IIP says it has not provided deferrals of any rent obligations to any tenant since July 1, 2020.

In Closing

The New England market holds a great deal of promise for the cannabis industry. The pandemic has caused a huge disruption in traditional retail for many of these economies. Lockdowns caused a spike in online shopping causing many brick & mortar retailers to close up, presenting opportunities for dispensaries. While rural land values have risen as remote working created an opportunity for urban dwellers to relocate to more rural settings. Once depressed towns have seen new life, so the days of cheap big acreage in remote locations have declined. It’s still relatively early in this cycle for cannabis industries and the picture is sure to change as rules regulations get decided and then perhaps tweaked again. 



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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